Portfolio Tables Updated

Sun, 2016/01/31 - 2:17pm | Your editor

 

But current subscribers can view the performance of our stocks last week. Except for two sectors, everything we own went up. Was this gold (which also is going up) or merely glitter?

I am reminded of the old UK television program: TWTWTW, which stands for that was the week that was. The big question now is if that weekly gain will repeat itself in the current week. If I knew the answer I would not be writing a newsletter in return for subscription revenues. More for paid subscribers follows:

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Japan and MICK

Fri, 2016/01/29 - 2:18pm | Your editor

Factoids. By the waters of Babylon, there we sat down and we invented tacking geometry over time, about 1600 years before it was supposedly discovered. The Babyonians were watching Jupiter in the skies, AKA the god Murdoch, no relative of Rupert who just reappointed his son James back into managing a chunk of the empire after letting him go during the UK hacking crisis.

King Tut's wet nurse's mummy has been found. She also was his sister. Nobody besides his sister was good enough to be pharaoh's wet nurse (or wife.) You can go to the Velasquez exhibit to see what that leads to.

Now for the real news:

The latest acronym for emerging market investors is MICKs, which stands for Mexico, India, China, and  (South) Korea. It replaces BRICS because of the rotten outlook for Russia and Brazil. Take any such mnemonic with a tablespoon of salt. But note that we are presently over-invested in 3 of the quarter, but not China.

Japan surprised the world by imposing negative interest rates to try to end the decades-long deflation in its economy, after a 5:4 vote at the Bank of Japan. It also will lower rates further to trigger inflation and growth if needed. This came after pre-move central bank denials even at Davos, which is usual.

Bond yields in Japan crashed after the CB headed by Harukiro Kuroda decided to charge banks for placing money with the Bank of Japan. Annual yields on 20-yr bonds fell to 0.82% and 10-yr ones to 0.11%, levels not seen since the start of this millennium. Bank stocks fell but the Tokyo market overall decided that this was a good thing for stocks, and they rose there. Euro markets and Britain also rose.

For some reason this triggered an attack on central banks by Marc Faber, who earlier was dropped by the Barron's Roundtable. Rupert Murdoch is also behind Fox TV refusing to do a deal with The Donald over who would moderate yesterday's debate.

The Chicago purchasing managers index for Jan. came in at 55.6, showing a strong economy. Whether this applies for the whole USA will be known next week.

More for paid subscribers follows from Bermuda, Brazil, Britain, Colombia, Denmark, Ireland, Japan, Panama, South Korea, and The Netherlands, including two annual reports.

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Cheap Oil Bad!

Thu, 2016/01/28 - 3:35pm | Your editor

OPEC good; cheap oil bad.

Lance Roberts, chief investment strategist of STA Wealth Mgm today points out why falling oil prices are bad for the economy. “The knock-off economic impacts are job losses through the manufacturing sector and all other related industries” among which he includes real estate (at least in Houston.)

Every high-paying oil service job accounts for up to 4 downstream just-as-well-paying jobs.” He cites construction in particular. He was writing in talkmarkets.com (link: www.talkmarkets.com/content/us-markets/3-things-fed-error-houston-re-no-bounce?post=84088)

What we have to do is forget the oil politics of the 1970s. Then OPEC quadrupled oil prices and caused global economic havoc and derailed economic development in poor importer countries.

Forty years on, perversely, the problem is OPEC's failure to control output and keep oil prices from free-fall.

So today the news that Russia (not a member of the oil producer country cartel) is engaged in talks about a Feb. production cut resulted in oil futures rising nearly 8% and stock markets booming a bit less. The talks apparently involve everybody cutting oil production by 5%, according to a Russian press wire, Interfax, quoting energy minister Alexander Novak.

"It looks more and more like this is the first sign of surrender in the global production war,"Phil Flynn, a senior market analyst at Chicago's Price Futures Group told Bloomberg. "With capital expenditure slashed and energy projects killed a 5% cut would get the market in balance." OPEC issued a denial immediately, but it would do that.

(Interfax is a notorious transmitter of internet viruses so I cannot confirm this. Dow Jones is skeptical but the market is not.)

Gong hei fat choy. Feb. 6-7 marks the start of the Chinese Year of the Monkey, and New York's festivities will be moved from Chinatown in Lower Manhattan and Flushing in Queens. The dragon drag will come to Madison Avenue in east Midtown and Uptown this year in a bid to get more business from round-eyes.

The chief architect of Abenomics, Akira Amira, has resigned as Japanese finance minister after charges of corruption, which he denied.

More news today from another batch of reporting companies in Sweden, Britain and Singapore, and news from Ireland, Israel, Italy, Norway, Australia, Myanmar, China, India and Pakistan. It is another day with many reporting companies.

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Trading Alert

Wed, 2016/01/27 - 3:34pm | Your editor

Trading alerts are only for paid subscribers. Join them to win.

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Busy Wednesday

Wed, 2016/01/27 - 3:19pm | Your editor

It's one of those over-loaded reporting days and my blog is delayed because there were too many conference calls this morning. And trades. Plus various business deals for my company as well.

But before moving on to the subscribers' service, I wanted to gloat about having scooped the Financial Times (!!) with my article about Soros and the renminbi published yesterday. It was reprinted on the www.talkmarkets site at http:www.talkmarkets.com/content/global-markets/one-load-gone?post=83901&uid=4662

 

Your editor has invested in the talkmarkets website and is happy that the startup's articles will be reported on starting next month by Reuters, the wire service.

Also we are looking into posting business articles on the Ireland-based researchandmarkets website. It sells company research all over the world. If any reader (particularly across the pond) is familiar with the researchandmarkets service, aimed at corporate and academic researchers, please give me your view of it.

 

The World Bank has cut its forecast for 2016 oil prices to $37/bbl from the $51 it predicted last Oct. I assume there will be further crude adjustments. It is a Johnny-come-lately on oil prices.

 

While the US dollar has dropped against the loonie, down 1.2% today, good for those of us investing up north, the Canadian stock market is now formally in correction, according to The Investment Reporter, the 75-year-old award-winning Canadian newsletter with which we trade ideas. That means stocks are off by 20% or more.

This gives you a chance to buy Canada blue chips on the cheap. TIR's 15-year performance, calculated by Hulbert's Financial Digest, the newsletter on newsletters now published by Dow-Jones Marketwatch, was 11.7% per year. The best performing Canada stock fund gained 8.9%/yr; the Toronto index 5.1%; and the average stock fund 4.6%. Hulbert also wrote that TIR's Speculative Stock Portfolio was the best performer among the 500 newsletters he tracks, up 117% in 2015 (in loonies, not US$s alas.)

 

More for paid subscribers from The Netherlands, Israel, Switzerland, South Korea, Iran, Ireland, Britain, Spain, Germany Hong Kong, South Africa, Colombia, Brazil, and Canada. Including some sells.

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One Load Gone and

Tue, 2016/01/26 - 2:22pm | Your editor

One heavy load the market faces is the price of oil which, to my surprise, no longer helps people when it falls, perhaps because the US is now a swing producer. Back when I worked for the Senate Foreign Relations Committee, my boss, Sen. Clifford Case (R-NJ) said the only way we could get out of the clutches of OPEC is if we stopped importing oil. Now we really have cut back thanks to shale, alternative fuel, and cars consuming less gasoline.

OPEC is reportedly working on a deal to cut oil output between some of its members and non-members like Russia. The mere hint of this, reported by CNBC this morning, has boosted the price of oil to over $32 per barrel. The Iraqis appear to be the intermediary between fellow-Shiites of Iran and fellow-Arabs of the Gulf and Saudi Arabia.

Crude oil rose 6.1% in Europe and, so far, 5.8% here. That's one overhang on the markets gone, if this pans out.

 

The other one is China, more difficult. China is unlikely to listen to the message from the governor of the Japanese central bank. But with Shanghai stocks falling 6.4% and Shenzhen ones falling 7.1% today, Haruhiko Kuroda has a point. He advised China that it might do better by re-imposing exchange controls.

The Beijing regime is in a quandary. China wants to become an international currency player, and got the renminbi recognized as a global currency by the International Monetary Fund. Yet its dire economic situation requires that the government keep interest rates low and exchange rates high without capital controls. This amounts to what economists call “an impossible trinity”. Monetary policy can only achieve two of the three goals at any time.

The main reason for the drop in China stocks was news from Bloomberg that the mainland recorded $1.94 bn of December exports to Hong Kong for every dollar of imports HK registered. Some $22.3 bn went missing out of $46 bn of shipments supposedly made to Hong Kong. This bleeding of Chinese reserves backed the opinion of George Soros that Chinese banks will fail and led to the market falls.

Soros said that China was “a root cause” of “a global bear market” on Bloomberg TV from Davos. He added that “the Chinese left it too long to address the changeover in the growth model that have to adapt from—investment- and export-led to domestic-led. “A hard landing is practically unavoidable.”

Back in 1992 Soros made his fortune by successfully betting that the Bank of England could not keep the pound sterling pegged to the precursor of the euro, by shorting the pound with every penny he could raise.

Soros was then rebutted on Bloomberg TV by analyst David Goldman who called Chinese bank stocks “very attractive” at 4x earnings.

Goldman is head of Americas for Hong Kong's ReOrient Group and predicted Mr Soros would hit “a hard landing”. One of our Asia hand readers who knows ReOrient sent me the tape in which Goldman quotes Uwe Henke von Parpart, ReOrient's head of research.

Both Goldman and von Parpart were part of the Lyndon LaRouche movement formerly run from right next door to this office. Both then wrote for AsiaTimes, a website, Goldman as “Spengler”.

Having met Soros I think he is less intellectual than he claims but very rich and smart over currency trading. Two decades ago at a Brooklyn dinner party, I sat on one side of him while Alexandra, the wife of Harvard professor Arthur M. Schlesinger jr, (he has since died) was showing up Soros's lack of knowledge of economic history. We two Radcliffe women rather overwhelmed the former student at London School of Economics.

Today Goldman and Parpart have a new ally as the People's Daily warned that “Soros's war on the renminbi and the Hong Kong dollar cannot possible succeed—about this there can be no doubt.” A couple of hours after attacking Soros, the head of China's statistics bureau, Wang Baoan, was arrested for corruption.

 

More non-gossip news for paid subscribers from Britain, Colombia, Panama, Bermuda, the Netherlands, Denmark, Norway, Canada, Germany, Spain, Switzer-, Fin-, and Ire-land. We include analyst upgrades which are coming in almost daily because the usual weekend timing was upset by the Blizzard of 2016.

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Trading Alert

Mon, 2016/01/25 - 3:18pm | Your editor

Trading alerts are only for paid subscribers. Today I made two moves.

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The Dig-Out

Mon, 2016/01/25 - 1:52pm | Your editor

It's dig out day and there are oddball stock market implications from the great blizzard of 2016. Insurance and re-insurance companies are suffering sell-offs, because of fear they will have to pay for P&C disasters.

The US dollar is correcting lower against our neighbor currencies with better weather, the Canadian loony and the Mexican peso, in particular, but also vs the yen, the Norwegian krone, and the Korean won. In theory at least the fall in oil prices should have hurt the C$, the krone, and the Mexican peso. But forex markets move in mysterious ways.

 

Monday saw Asian markets up alongside the currencies, but European markets fell, heralding trouble for the opening here.

 

The leftward swing in the Portuguese parliamentary elections was reversed by a landslide victory by a center-right candidate in the presidential elections yesterday. Portugal's president can dissolve parliament if voting produces disarray or a major coalition defeat. So the victory of Marcelo Rebelo Sousa means the left will have to tame its rhetoric and program despite allowing the old Portuguese Communist Party to join its coalition, which didn't happen in Spain. In Spain it is up to the king to decide to dissolve the legislature, not someone the people get to vote for.

So I think this move rightward should have boosted European markets, but they run on their own steam and don't listen to me.

 

My Friday blog was reprinted today on www.talkmarkets.com so anyone who wants to test our service can view it there. You can link to it through our website, www.global-investing.com

 

Today we have analyst updates and a bit of news from closed-end and exchange-traded funds, plus important oily and gassy geopolitical insights from Egypt, Israel, Britain, Brazil, India, Luxembourg, The Netherlands, Mexico, Ireland, Germany, Switzerland, Chile, and Canada.

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Tables Posted

Sun, 2016/01/24 - 1:18pm | Your editor

While still suffering the after-effects of the nor'easter yesterday, I managed to post our performance tables on the website, www.global-investing.com where pre-subscribers may view the closed positions, and current subscribers may view the whole nin yards.

Our pre-subscriber enrollment system was hacked on last week by what my old boss Sen. Clifford Case (R-NJ) used to call Polonians, because he didn't want to say "Polacks". like Shakespeare did in Hamlet. We ran into trouble with ultra-patriotic Poles, mostly from nowhere near Warsaw or Cracow to judge from their addresses, who signed up in great numbers to allegedly get the free version of our blog.

This was not because they wanted to know about global investing; it was a distributed denial of service attack to try to shut down our site because we opted to drop the exchange-traded fund invested in Polish shares, EPOL.

We dropped EPOL because Poland's right-wing government violated European Union rules on an independent judiciary and press freedom, and its future economic performance is likely to be hampered thereby. It is an ironic comment on how Internet-savvy Poles are now behaving like Chinese hackers. Back when we first went onto the Internet we used a Krakow-based group of web designers I was introduced to by a Pole working in my building, whose brother was on of the founders.

We still are in an Eastern European network but no longer with Poles, but with a Canadian of Hungarian ethnicity who serves as our webmaster. This is in part because the Pole who arranged the original Cracow deal died of a heart attack and the other Pole working here is not involved with computers or Cracow.

While we cleaned up on list to remove the fake Polish sign-ups, we may have missed a few. So this is to inform you that Polonians are welcome but we do not let our pre-subscribers dictate our investment advice.

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Before the Blizzard, Stocks Recover

Fri, 2016/01/22 - 2:56pm | Your editor

It's off to the races today.

Before recounting the latest mostly good news from our portfolio, here are good developments from India where, we hope, PM Narendra Modi will tackle political obstacles to his economic reform program rather than just talking about them. India cannot screw up its policies by decree, as China has done lately, because it is a democracy and the Congress opposition party controls its Upper House.

When I was last in China, over 7 years ago with a guided tour, the only way you can visit there, we were taken to lively performances by acrobats, dancers, soldiers, and students in cities we visited.

The music was almost always not Chinese, but from Bollywood movies. When we didn't recognize the music, a couple of Indian- American doctors in our group pointed it out. Now Bollywood is really in style for China as Dalian Wanda, the huge and acquisitive Chinese real estate and entertainment company run by one of China's richest men, Wang Jianlin, will invest $10 bn to build an industrial park in the north Indian state of Haryana. It will be called Wanda Industrial New City, and will cover 5 square miles. This project, to begin construction later this year, is the largest ever foreign investment in India.

What is important is that Wanda has managed to sign up an India state without interference from the country's obstructive rubber stamp “raj” bureaucracy.

Here is a second sign of the times. India will allow vaccinations against 4 kinds of dengue fever without drug trials because of serious outbreaks, according to India's Economic Times (quoted by Reuters.) The vaccine, Dengvaxio, is made by Sanofi of France and has also been given approvals in less bureaucratic countries like Mexico and The Philippines. By-passing India's Drug Controller General, however, is very unusual.

Brazil troubles have hit Keppel of Singapore which halted work on behalf of a sub of Petrobras in the sub-salt offshore fields. Its write-downs wiped out Q4 profits at S$230 mn (US$160 mn) and up to 40% of its order book. We told you first when we exited Keppel and I reminded readers of the yesterday before the news hit.

 

The big lesson of today is not to pay too much attention to analyst downgrades. The market moves according to its own dynamics. More for paid subscribers from Singapore, Poland, Canada, the Netherlands, Denmark, Australia, Colombia, India, Italy, Brazil, Britain, Ireland, Japan, Belgium, and Spain. I'm off to the supermarket to stock up for the Big Storm tonight.

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