Pubs, Pizza, Princes

Wed, 2017/06/21 - 5:46am | Your editor

Despite my skepticism, China today was added to the MSCI EAFE index by its managers, 4 years after the application was first made. Now A shares traded only in Shanghai and Shenzhen will have to be purchased and sold by index-tracking exchange-traded and other mutual funds. The initial impact will be slight, as only under 0.5% of the EAFE index will be made up of Chinese Mainland shares, because of liquidity rules. State-controlled or closely held companies are not indexed. Longer term, however, this gives China a foot in the door. And it is also a symbolic victory for Beijing.  ​​However, the index ​group turned down adding Argentina to EAFE and left Nigeria in the category of merging market. It also turned down a Saudi application to become part of EAFE.


 

The Saudi Arabian system for rotating clans of the offspring of founder King Ibn Saud to run the country has been thrown into disarray today.  King Salman, 80, ousted the Crown Prince, Mohammed bin Nayef, and named his own 31-year-old son, Mohammed bin Salman, as his official successor. Bin Nayef was also removed as Minister of the Interior. This is something like the rise of the Tudors in Britain and can lead to extreme instability, along with the shrinking price of oil.

 

My note on the local pub here was criticized, erroneously, by a UK chronicler of the Royals, reader John D. He said the courtship of Princess Margaret took place at the Waterman’s Arms pub. Indeed that is so, but the old pub-restaurant was sold and renamed about 15 years ago and now is the Great Northern, a backpackers hostelry, internet hangout, and pizzeria with nary a royal in sight. Snowden and Princess Margaret did not eat thick-crust pizza, the current at the pub, but real food lovingly prepared at the old Waterman’s Arms. But that is still no excuse for a teardown.

 

Speaking of pizza, my taste-test of Domino’s Pizza UK & Ireland when the share was first listed 3 years ago turned out to be prescient. After rising for a while because of the novelty effect, London-listed DPG yesterday shrank down to a mere slice of its former size, off 6.5%.

More news about our holdings follows from Britain, Japan, Panama, Canada, Ireland, Hong Kong, Mexico, Colombia, Bermuda, the Dutch Antilles, Fin- and Switzer-land.

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The Local Pub Teardown

Tue, 2017/06/20 - 11:05am | Your editor

For the 4th time the MSCI indexers are considering whether or not to add Mainland Chinese listed 'A' shares to their global market coverage in the MSCI Europe, America, and Far East (EAFE) index. This is leading to lots of position-taking in the largest stocks listed in China proper but not yet in its window to the world, Hong Kong. In fact the likelihood that China will represent a serious part of the global MSCI index in the short-term is low, because many listed companies and banks do not meet international market standards, being state-owned. And even if some of the shares being acquired do join the MSCI, the funds which follow it will take their time piling into these stocks, which will probably never amount to more than 3 or 4% of the MSCI total. More on the MSCI EAFE Index below for paid subscribers.

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Macron Macro Win

Mon, 2017/06/19 - 8:21am | Your editor

Emmanuel Macron is estimated to have control of the French National Assembly after the vote Sunday. His France en Marche party won 308 seats according to the latest count, along with antoerh 42 seats for the MoDems who also back his governmnet. It only talkes 289 seats for a majority. However, the vote turnout was particularly low so there will have to be negotiations over changes in key labor laws.

Meanhile the Finsbury Park mosque was attacked last night after the Ramadan fast and at least one person has been killed here in London. And it turns out that I am partly responsible for the horrible fire in the Council high-rise building in north Kensington, as a shareholder in Arconic, the maker of the aluminum cladding that was the vector for spreading the flames. I own shares in this recent spinoff from Alcoa although of course it did not want the company to mis-sell its products. I happen to know a former member of the Alcoa board because her parents in law were our neighbors many years ago in Brussels, and she too would not have allowed mis-selling of products either.

More for paid subscribers from Denmark, Israel, Britain, Ireland, Finland, Japan, Hong Kong, India, Sweden, Panama, Germany, Spain, and Brazil today.

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No Stolen Picasso at White House or No. 10 Downing St.

Fri, 2017/06/16 - 7:03am | Your editor

Jared Kushner and indirectly his wife Ivanka Trump are now in the sights of special counsel Robert Mueller (I am leaving out his middle initial and 3 ticks because he is now famous.) He is looking into  the first (and only) son-in-law's financial and business relations, according to knowledgeable (but anonymous people) cited by the The Washington Post, quoted by European papers. Before his father-in-law took office, his family members met with Russky ambassador Sergey Kislyak and a Moscow banker, and are now the focus of an FBI investigation. One of Kushner's lawyers told the newspaper which broke the Watergate affair that nobody knows what the investigation is about. To translate from German, the whole process will be examined and the special counsel will look at financial underpinnings seeking links to Russia, according to lawyer Jamie Gorlick. Trump meanwhile twitters on, arguing that the relations of the Clintons and the Democrats should be examined along with Bill Clinton's meeting with the Attorney General over the email affair.

 

Back in the other center of the English-speaking world, Britain and the European Union confirmed that the British Brexit Secy David Davis will go to Brussels Monday to start talks on the terms of the UK's withdrawal from the EU. PM Theresa May decided to press ahead with exit talks despite her Conservative Party still lacking a majority, as it is still negotiating with the Northern Irish Democratic Union Party to get their votes in order to govern.

 

There is a smell of fin de regime in Washington and London. Martin Ferera, writing from Canada, says “the Maybot, as she is unflatteringly called, managed to blow a commanding lead in the polls and win yet lose the UK general election. Now Britain not only has an unstable minority government but is faced with the possibility leftist Jeremy Corbyn can become the next prime minister. The chaos to come may result in Britain becoming again what it was when I moved there in the 1970s from what was then Rhodesia: the sick man of Europe."

My husband, a born Briton, says his country is only “the most confused” in Europe. We are doing better than Malaysia at least. No stolen Picassos have been spotted at No. 10 Downing Street or in the White House.

Martin has some stock moves in mind for paid subscribers, given below along with news from Switzerland, Hong Kong, Denmark, Israel, Japan, Britain, France, and Canada. Also a comment about interest rates and energy prices by your most confused editor. We fly back to London this Sunday from our Portuguese stay, which was for family business. I am filing early as is explained to paid subscribers below.

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Cowards and Cows

Thu, 2017/06/15 - 10:00am | Your editor

On a day when this investor feels like a coward, let's start with cows. How now brown cow, grazing in the green, green grass. Brian Bellhouse, the Oxford Prof made a fortune with a DIY PowerJect syringe replacement injections using compressed gas to avoid having to pierce the skin. He was killed during a country walk in East Sussex by stampeding cows this week.

Qatar, boycotted by its neighbors, settled a herd of cows in a barn to provide milk to the population, hitherto supplied from across its borders in Bahrain and Saudi Arabia. I suspect they will live in air-conditioned barns as dairy herds do in Israel.

A Norfolk vegetarian who inherited a beef farm donated his 59-cow herd to an animal sanctuary rather than let them be slaughtered.

The Narendra Modi rigorous Hindu government has hit India's show industry, mostly manned by lower castes, because they cannot get leather. Workers are being fired for the sake of the the sacred cows.

 

U.S. stock futures dipped and Asian and European shares were on the defensive on Thursday after media reports that Pres. Donald Trump is being investigated for possible obstruction of justice by special investigator Robert S. Mueller. The counsel has contacted 3 present and former intelligence officials to question them regarding contacts between the Trump campaign and Russians or others who may have been meddling in the US election. This opens up a new can of worms.

I worry about the Saudi-Qatari standoff as it cannot but mean major trouble ahead.

And Theresa May, the other top leader of the English-speaking world, is still not assured the votes of the Democratic Union MPs from Northern Ireland. (Apologies to reader FBN and others who may have found my references to the Orange Order offensive, and who think the Ulster Protestants should be called Scots-Irish. I was reflecting on a building, not politically correct at the time, to say nothing for now.)

 

More from Spain, Mexico, Israel, India, Australia, Britain, the USA, Bermuda, Greece, Cyprus, Canada, Finland, Poland, and a few other places.

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May Day for Brexit?

Wed, 2017/06/14 - 7:11am | Your editor

In college, I attended High Holy Day services with my childless Boston aunt and uncle who lived in Allston rather than at the university. They were not very religious, running a German delicatessen selling non-kosher food to fellow-European refugees, so the Jewish New Year and Day of Atonement services were not in a synagogue. They were held in the Orange Lodge in Allston, a relic of Protestant Irish immigrants to Boston who wanted to continue their harrassment of the Fenians in the New World.

By then the Northern Irish had become a tiny minority as Boston's Irish Catholics took political power. During the services when I got bored I examined the stain glass windows, showing the Battle of the Boyne, when William of Orange (husband of Mary) defeated the ragged Irish rebels and their church, represented by something like the College of Cardinals in full panoply and miters. There also was a stained glass window showing the Orange-men marching with banners and halbards through the Irish slums and trampling the inhabitants.

These symbols had gone date well before the Jews hired the Orange Hall, but they spring to mind as the British Conservatives join with the relics of the Orange Order to continue to govern during the Brexit crisis. The legacy of William of Orange and the Rev. Ian Paisley is devisive and dangerous.

 

Yesterday David Jones and George Bridges, two of the 4 British cabinet members working on Brexit, resigned over the complexities of the new narrow parlimentary majority dependent on the Orangemen. They are frustrated by the failure of Prime Minister Theresa May to keep the Department for Exiting the European Union, or DEXEU, informed of what she is up to in her talks with the Northern Irish members and also with EU leaders.

 

French Pres. Emmanuel Macron and German Finance Minister Wolfgang Schaueble today called on Mrs May to halt the drive to remove Britain from the EU before negotiations formally begin next week, saying once talks start it will become harder to reverse any UK move to exit. Her alliance is a further irritant. I wrote that she might be a secret remain supporter last autumn (following a Canadian academic who suggested she was a Trojan Horse).

 

This morning Bloomberg writes that “Doubts appear to be growing in the UK over its government's tough stance and ability to handle the withdrawal successfully after last week's election.” So there may be a good outcome, the one my British relatives all support, starting with my husband.

 

More for paid subscribers follows from Japan, Britain, Finland, New Zealand, Mexico, Chile, Argentina, China, Hong Kong, Canada, Australia, Germany, the US, the Dutch Antilles, and a few other places. Today is deal-making day.

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Stock Sale

Tue, 2017/06/13 - 10:21am | Your editor

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Copying the Enemy

Tue, 2017/06/13 - 8:34am | Your editor

From the Algarve I am pondering how both Theresa May and Donald Trump are becoming like their enemies. Mrs May has to deal with horrible terrorists, and yet she is allying herself with horrible terrorists from Northern Ireland to keep power. These Ulstermen have blood on their hands bigtime just as their IRA opponents do.

Trump seems to be involved in trivia rather than focusing on the largest current challenge to US security, from nuclearized North Korea. Pres. Trump's televised full cabinet meeting involved everyone from himself on down praising his administration's work to date. This reminded the Frankurter Algemeine Zeitung today of nothing so much as how the North Korea regime praised Kim Jung-Un for more talent at governing than anyone else.

Is Washington turning into the Hermit Kingdom just as London is turning into Belfast?

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CRISIS1

Mon, 2017/06/12 - 5:30am | Your editor

To view a newsletter, pre-subscribers should head for the following website, which is free: http://www.talkmarkets.com/content/global-markets/may-hem-sterling-collapses?post=138246&uid=4662.

 

*I have no idea if Trump is suicidal or not but his decision to stand up to Comey while under oath reeks of Mayism. I imagine that there has to be a tape, or otherwise Trump is toast.

*Our pal Adrian Ash wrote to explain the gold sell-off surprise after Theresa May failed to win a Parliamentary majority. The editor of www.BullionVault.com said the UK investors were selling and taking profits as gold rose in sterling terms. Volume in British trading was 4 times that of anormal Friday and the price in sterling of the yellow metal hit £1007 after it opened the week at £993.

Also unexpectedly, the UK index rose, mainly because the FTSE 100 is dominated by companies which operate globally, and are able to offset the terrors of a “hung” parliament thanks to currency factors. The exceptions were outfits like BT, the homeland telco, which mostly earn sterling. And even though oil stocks are under bearish pressure worldwide now, UK oil companies are up because they are dollar-earners.

 

More for paid subscribers follows from China, Finland, Britain, Israel, Ireland, Australia, the US, Chile, Canada, Belarus, Mexico, and Sweden.

May-hem

Fri, 2017/06/09 - 6:59am | Your editor

Politics is a risky business and Theresa May's poll gamble has failed. I got some flak yesterday for reporting the odds offered on a May victory by Ladbrokes bookies because early polls—before the two terrorist attacks and her blunders over debates and taxation of senior citizens—had put May 20% ahead of lefty Labour leader Jeremy Corbyn. But of course t moves by the betting public in Britain is a good way to predict how people will vote.

I expect the Tories will bring out their long knives. The ousted former PM David Cameron was made the scapegoat for an unnecessary poll over Brexit; how much more venom will be generated by the party which had a solid majority before May opted to go to the country well before it was necessary under the rules.
May may have to walk the plank, in which case a coalition government including some wiBremain elements like the Northern Irish Democratic Union Party, which wants to keep links with Ireland, the Liberal Democrats, the Greens, and the solo independent, and the solo Independent will hold the key to power. They can swing either way, to Labour or the Conservatives. But whichever way they move, May may not survive as the exemplar of a “hard” brexit.

As I write she is meeting with the Queen to discuss creating a minority government with support from the DUP, which is potentially a blow to the whole Brexit project. A border running between Ireland and Northern Ireland is a blow to both economies and peace between them.

The Frankfurter Allgemeine Zeitung tried to figure out what the UK polls mean for Brexit. It quoted Michael Hewson of CMC Markets in London: “The Scottish Nationalists and Liberal Democrats want to stay in the European Union. So there is a possibility that Brexit may never happen at all!”

As for sterling, Stephen Gallo at Bank of Montreal told the Financial Times that Brexit is "factor number one" for determining the pound's near-term direction. A minority Conservative government implies a "softer Brexit", he adds, a scenario that points to a firmer pound. Today in Asia trading, however, the pound was pounded, because markets hate uncertaity.

 

There is news today from India, Britain, Israeli, Australia, Canada, Germany, Spain, Sweden, Hong Kong, Mexico and a few other places like Nevada. Monday's blog will be from Portugal.

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