Fund vs Fund

Thu, 2017/12/07 - 2:20pm | Your editor


Today the Slovenian exchange called Nice Hash was hit by a hacker. Slovenia is a newish Balkan country which runs the northwestern-most part of former Yugoslavia. This new country produced the beautiful Melania Trump although when she was born it did not yet exist. It also produced the now Italian mother-in-law of one of my nephews. In that part of the world, borders suffer from variable geography.

Nice Hash was a bitcoin exchange whose main clientele was from across the border in Italy, which has a frequently deserved reputation for having lots criminal mafias. From Italy or somewhere else, hackers stole 4,700 bitcoins. At present quoted prices for the crypto-currency that amounts to $70.5 million. It is only one of several thousand unregulated bitcoin exchanges.


TEI vs EMTL Read more »

The Beautiful Game

Wed, 2016/06/01 - 12:39pm | Your editor


The new trend for young Americans is to play soccer rather than American football, mainly because it is less likely to scramble their brains. The beautiful game is played by girls as well as boys (but in separate teams based on birth sex.) The tournaments are pretty vicious and played hard, I concluded after a weekend watching my two youngest grandsons playing what I was raised to call football.

My father was the goalie of a club made up of Jewish refugee men who played near the Hudson River off Dyckman Street, mostly against other ethnic clubs of Irish, Hispanic, and Greek background. While I also watched lots of baseball, this was the live sport of my childhood.

And now it is becoming more American. The teams I saw this weekend at the Massachusetts finals were from public schools and private teams, with most of the black boys from the latter, including one brilliant goalie whose good work I could recognize thanks to my childhood training as a fan. There was also at least one boy on that team who looked like he was transitioning to becoming a girl, to judge from his 'do.

Too bad the US State Dept is warning us not to go to watch the European soccer championship matches this month and next, mostly in France and Belgium, for fear of becoming the target of terrorists.


Targets are slippery in any case. We are sending our emails from an incomplete hosting site so they do not look the same as before. Rest assured; they are really from me. But in response to my warnings yesterday to look for the “spam” emails resulted in bad news back: two of the websites with which we share idea turn out to have been hacked. “Please don't open anything they sent you” wrote an Irish publisher. And, not too surprisingly, there is hanky-panky also at work in Hong Kong. Such, such, are the joys.


More for paid subscribers follows from Canada, Korea, Pakistan, Britain, the Dutch Antilles, Israel, Australia, and a few other places.

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Poor Bopeep Has Lost Her Cellphone

Tue, 2016/04/26 - 1:16pm | Your editor

Iceland is having more Panama Paper problems. After the Prime Minister was fingered for having an offshore account, its President, Olafur Ragnar Grimsson turns out to also have had an account in a tax haven established by the bent Mossack Fonseca lawyers. Grimsson says the account was set up by his wife and he didn't know about it.

Because of a continuing crisis with my email account either caused by gmail or by our webhosts (each blames the other, how you survive as a technical expert in Manila) and because my work around has gone wrong because I lost my cellphone (aaagh), today's free note is short. We have news from Ireland, Israel, Australia, Switzerland, Mexico, Panama, Britain, the Dutch Antilles, and Finland from sectors ranging from mining to drugs, from IT to banking, from cement to plastics, from oil to weapons. We start with a key quarterly report.

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Oil and Stocks

Mon, 2016/04/11 - 2:12pm | Your editor

Your editor has known oil industry expert Daniel Yergin since working for the Senate Foreign Relations Committee in the 1970s. Yergin attended our hearings on Opec's quadrupling the oil price and then turned out readable versions of the revelations, forecasts, and strategies the Senators had extracted from their witnesses. My then-boss, Sen. Clifford P. Case, R-NJ, called Yergin a “terrible simplificateur.”

Dan Yergin is still at it. Today he managed to be quoted at the top of the financial second section of the Financial Times saying: “the era of Opec as a decisive force in the world economy is over. It is clearly a very divided organisation.”

Then he went on to say that he expects the price of oil to rebound despite increased Iranian output. “A lot of storage is filled up but we're not at that point where there's no place to put the oil and so I think this period will be the bottom.”

He added: “in the second half of this year or early next year you'll see the market more in balance.” Dan is once again hedging his bets. Last week oil rose over 5%.

Sen. Case was quoting 19th century Swiss cultural historian Jacob Burckhardt's comment on the failure of historians to properly understand how closely the Middle Ages linked to the Renaissance. Like the senator, Burckhardt was the son of a Calvinist dominie.


More for paid subscribers follows from the oil patch and the parade of Latin lovers, plus news from companies from around Europe, the heart of Texas, and Japan.

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Exchanges Exchanging Vows

Wed, 2016/03/16 - 2:26pm | Your editor


Persistence wins out for those left at the altar by their potential brides. After failing with bids in 2000 and 2005, Germany's Deutsche Boerse [DB] finally won a deal to become the spouse and gain control of the London Stock Exchange [LSE]. The market cap of the LSE is $14.3 bn.

However, Bloomberg warns that the plan to create a European stock market giant may “kick off a bidding war as rivals look to scupper” it.

While supposedly a merger of equals, Bloomberg notes that “Deutsche Boerse stockholders will get 54.4%” of the shares. Moreover DB “CEO Carsten Kengeter will run the enlarged business.” On the other hand, the board will be equally split between directors from LSE and DB.

The combined exchange operator would become “a powerful competitor to CME (Chicago Merc), Intercontinental Exchange [ICE], and Hong Kong Exchanges & Clearing Ltd., although the transaction could yet be derailed by competition concerns,” it writes. The merger “may also have to survive bids from other major exchange companies, such as Intercontinental Exchange, which has already said it is contemplating making a higher bid”. [ICE is a buy recommendation from Argus Weekly now with a $270 target.]

“It’s the right deal for the shareholders, customers and employees of both LSE Group and Deutsche Boerse,” LSE Group Chief Xavier Rolet said in a conference call. “It is absolutely the right time to take this transformational step in our histories.” Rolet will step down if the deal is completed. Dealmakers Kengeter and Rolet both used to work at Goldman Sachs.

However, the Financial Times warns that the target savings from joining forces, £450 mn, exceed what analysts had expected. Obstacles the pink paper expects include Kengeter having to convince Germans and unions that running the combo from London is not a sellout of Frankfurt as a German financial center. Also he will have to untangle the complicated ownership of some key bits of the LSE like its LCH.Clear arm and its Swapclear interest rate swap business. Both favor other shareholders more than the LSE which has the largest shareholding, creating a challenge for DB in “extracting synergies”, the FT writes.

It concludes: “Over a timeframe of 5 or 10 yeas, the relevance of exchanges like DB and LSE will be dwarfed by US rivals, already twice their size, and fast-growing Asian operations in Hong Kong and Shanghai.”

Today after the Fed did not raise interest rates, stocks, bonds, and gold all rose and the dollar fell. Gold is up $17/oz at $1247. We recommend a way to legally buy and store physical gold with low fees on our www.global-investing.com website.


More on Anglo-German deals below as well as news from Argentina, Australia, Brazil, Canada, Chile, Colombia, Denmark, Finland, France, Hong Kong India, Italy, Japan, Oman, South Africa, South Korea, Sweden, and a new Canada stock pick from Martin Ferera and my reasons for holding back on it for US investors.

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Weimar II

Wed, 2016/02/10 - 2:07pm | Your editor

The USA is turning into the Weimar Republic. On the one hand we have a fervent nationalist and on the other a righteous socialist. Both of them have weird hair and, unlike their German predecessors, are not magnetic orators.

But it is still scary to someone bi-cultural. I was raised by parents who had lived through Weimar and the rise of Hitler and always voted for mainstream candidates, even when a neighbor of ours was head of the US Communist Party, and even when changing demographics brought Latinos to what had been a German-Jewish enclave in northern Manhattan. They avoided leftism and jingoism from experience.

Viscerally, I am frightened by what is happening in the primaries. Hitler came to power via an election, not a coup d'état, after a period of economic upheaval.

For good news, the price of oil is inching up again. And the market has decided that Deutsche Bank is not likely to default on its coco contingent convertible bonds.

So we do not have to try to find the equivalent to Hjalmar Horace Greeley Schacht, the head of the Weimar CB who supported Hitler in opposing reparations payment (and even campaigned on this during a visit to the USA.) But quit the Nazi government over German rearmament after the invasion of Czechoslovakia. He also argued against “unlawful activities” after the Kristallnacht attacks against Germany's Jews, and tried to work out a way to allow Jews to leave Germany with assets the Nazis wanted to seise.

This might have expected from someone bilingual in English and named after an American newspaperman by a father who had lived for decades in the USA. He was, moreover, born in Schleswig-Holstein, then German, but now Danish, and was Catholic in a land of Lutheranism.

Schacht linked up to the anti-Nazi resistance as early as 1941 although he was kept on at the Reichbank after the US entered World War II, mainly because Hitler feared the impact of his leaving. He was only ousted early in 1943.

Schacht was arrested and put into a series of concentration camps after von Stauffenberg in July 1944 failed in his attempt to assassinate Hitler. Liberated by the US 5th Army he was tried at Nuremberg for “crimes against peace”, but not for “crimes against humanity”. But he was acquitted from charges were that he had planned or waged wars of aggression. He later founded a private bank specializing in loans to developing countries as he had worked with many of their banks during the Weimar years to try to keep the Reichbank afloat by accepting payment in Reichmarks rather than dollars.


Mr Schacht worked for Dresdner Bank rather than Deutsche Bank as a young man. DB stock rose 14% this morning on news it is buying back some coco debt.


More for paid subscribers today from Ireland, Israel, Canada, Finland, Britain, Spain, Poland, Sweden, Denmark, Jordan, Mexico, Brazil, Belgium, Venezuela, Colombia, Ireland, Switzerland, and Japan.

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The Year of the Monkey Is Coming

Mon, 2016/01/11 - 1:37pm | Your editor

Last year according to numbers calculated by bank advisor Geoffrey Bell, the US dollar rose against almost all global currencies:

Australian $ 11%

Brazilian real 48.9%

Canadian $ 19%

Chinese yuan 4.7%

Euro 10.7%

Indian rupee 4.4%

Japanese yen 0.6%

Mexican peso 16.8%

N. Zealand$ 12.8%'

Russian ruble 28.2%

S. Africa rand 33.4%

Swiss franc 1%

UK pound 5.2%


Trade weighted 11%.



From Bloomberg, the new week doesn't look good. It began with another 1.9% drop in West Texas Intermediate crude, to $32.50/barrel while Brent crude fell 2.2% to $32.90 in London. Saudi Arabia said it will maintain the 30-yr-old riyal peg to the US dollar after 12-mo forward contracts for its currency hit the highest levels since late 1996.

Another day on the Chinese markets saw another sharp share price drop after another drop in the Producer Price Index marking deflation risks. The PPI at minus 5.9% overcame the 0.3% higher $ exchange rate for the yuan. The Chinese central bank had intervened pushing overnight deposit interest rates on offshore yuan to a record 38%.

The stock rout spread to Hong Kong, South Korea, Australia, and New Zealand but the Japanese yen and stock markets rose. European shares started off in recovery mode before falling again while US futures are up slightly. Gold continued its rise, up 0.8% to over $1105/oz before the US opened.

Adrian Ash comments:

“Gold is doing what it usually does at New Year. Eight times in the last decade, in fact. And to date, this January gold jump maps pretty much exactly what happened at the start of 2015 too.”

“Gold is often seen as offering 'deflation' protection, a hedge against the bankruptcies and debt destruction which falling consumer prices can create. Surely that is why gold has jumped again on the noise coming from China's stock market.

“Just as in late 2008, the threat of a widespread market crash makes rare, indestructible gold highly appealing to money managers. Most especially because unlike any other natural resource, gold is also next-to-useless for anything [other] than storing value.

“Let's not get too excited. The Chinese authorities haven't entirely lost control of the situation. Not yet.” Adrian then surveys the world's foreign exchange markets:

“For every Switzerland, stuck with falling prices no matter how many francs it prints and dumps to try [to] devalue the currency, there is a Sri Lanka desperate to shore up its currency on the FX market. Against Sweden, check out South Africa. [The rand fell 9% today before recovering a bit.]

“A glut of every [commodity] threatens to push prices down further. That's bad news for producer countries [like] Saudi Arabia. Fans of history can guess what comes next.

“The precious metals market of late 2015, [sees] the slowdown in wholesale dealing [at] the lowest turnover in 10 years. [This] is sending mixed signals from big bullion banks and trading houses.”

Adrian notes that China's ICBC Standard will use London as a gold trading base and may apply to become a clearing member in the London gold price 'fix' which already has 12 market-makers. He asks:

“What does ICBC, the largest bank in the world's second or first largest gold consumer market think about the future of precious metals? Ahead of the fun-loving, cheerful, and clever Chinese New Year of the Monkey starting on 8 February, it certainly seems to know that London remains the world's central gold-trading hub.” Gold becomes costlier to buy for foreigners including Brits when the US$, in which it is priced, goes up, as happened last year.

Adrian writes a weekly update for Bullion Vault, the legal London physical gold trading site for retail investors, www.bullionvault.com, our advertiser. Its sponsors include the World Gold Council, a grouping of gold mining companies, which also sponsors the GLD ETF, SPDR Gold about which there is more for paid subscribers below. Visit his site from www.global-investing.com to learn more about how to hold physical gold cheaply and legally.


Like everyone else I am waiting for Alcoa to open the US earnings season. Will good sales of aluminum for airplanes offset the slump in China? After the bell we will know. This is a better harbinger of 2016 stock performance than anything which happened last week.


More news but not much today from Spain, The Netherlands, Ireland, Israel, Italy, India (a political quarter of eyes) Britain, Mexico, Denmark, Canada, Germany, Finland, and Switzerland.

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Shakespeare vs Confucius

Mon, 2016/01/04 - 9:05am | Your editor

This is not only the year of the 400th anniversary of Shakespeare's death, but also when the Queen of England turns 90, in good shape thanks to her good Bowes-Lyon genes from her mother. As required we watched her address the nation after our Christmas lunch with relatives, and amid the pieties she stressed that the Infant Jesus and his parents were refugees, having to flee to Egypt shortly after Jesus was born. It would help if a few other supposedly Christian countries remembered that story, including the USA. It would also help the world achieve greater contentment if the Arab countries would take in their fair share, as they failed to do with Palestinians the last time there was a great need for havens.


How lucky the English-speaking world is that we had a literate enough population to attend theaters 400 years ago to learn nationalism, manners, and humanity from Shakespeare. Few other languages have such a dominant writer who appeared on the scene so early, creating a common culture that endures. We are all supposed to defer to China because there are so many Chinese people that just about everyone will have to learn to talk to them when my grandchildren grow up. But should the kids learn Cantonese, spoken in the south, or Mandarin, the official language and the version spoken in the north? The two are mutually incomprehensible except when written. Or should the youngsters just learn to read and write (and be less able to than their Chinese-heritage classmates with terrible Tiger Moms?) What is the point of learning to read a foreign language you cannot speak?

Hence Shakespeare beats Confucius.So I still think English has a good chance to become the global lingua franca after all. Today, on its first day's trading in western calendar 2016, the Chinese stock markets crashed 7% although circuit breakers were supposed to stop trading after the loss hit 5%. One result is that gold is up a bit. And the stupid Saudi execution of a leading Shia cleric for preaching protest has boosted the oil price, if modestly.


There will be no blog tomorrow as I will be returning home to the USA. We have news today from Britain, Canada, China, India, Israel, Myanmar, Finland, France, Australia, India, Brazil, Italy,Germany, Australia, and South Africa, but before that I wanted to comment on how a common market language (English) doesn't lead to a common standard of surveillance by institutional investors or regulators.


Apologies to any non-UK readers who followed me into whiskyinvestdirect.com last year. I ran the ad because the people behind the whisky (sic) site were the same crew as run bullionvault.com, the advertiser on our website. While buying physical gold can be legally done from any country in the developed world by converting your currency US dollars (in which gold trades), the same is not true for whisky which is traded only in pounds sterling (and whatever the Scots decide to replace it with if they get independence.) Like some of you I got a nasty note from Ramindar Ball, marketing mgr, saying that the thimbleful of whisky I had been credit with would be poured down the drain (adding to the British flood plain damage) with the new year unless I rustled up some sterling to add to the account (which costs serious money for foreign exchange fees at a US bank).

Any American who got the same message should write to Mr Ball at the address given in our ad for the gold purchase plan to tell him off. It is of course up to the investment firm to make the program accessible to the US investor, rather than to be rude to them. To the best of my knowledge the only takers besides me of the whisky offer were from Panama and Canada, but I'm unsure. Mr Ball's Indian cousins also cannot buy booze on the site; he should have been more globally aware..


Our disasters in 2015 were all caused by my failure to appreciate the simple fact that there is no real global standard for corporate governance or board independence, financial reporting, liaison with markets, capital market moves, and other daily operations of business. Our disasters include Portugal Telecom whose cash was looted by its bankers helped by a board member answering to the Espirito Santo family rather than to the shareholders collectively and a Chinese firm listed in London which was ousted from the AIM market for losing its Nomad. (A nomad is a nominated adviser helping Alternative Investment Market firms meet reporting requirements. China Chaintek was sold from the model portfolio (but I kept mine), and lost its Nomad because other Chinese firms were violating UK regulations, although it probably did not. With no Nomad it now trades nowhere and all the hot UK underwriters and experts do not reply to e-mails. (I did not phone them over Xmas lest I be called an uncivilized American.)


Our worst experience was with a company from a country where they sort of speak English, Australia, which we still own because I like its technology despite its rotten management. More on this for the paid subscribers among you along with a new stock idea discovered during my stay in London.

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Boxing Day News

Mon, 2015/12/28 - 7:35am | Your editor

Today British markets and banks are shut for Boxing Day, normally celebrated the day after Christmas. Because of the weekend the big day for returning unwanted gifts to the stores is today. Shopping is also going on and other European markets are open.


Through the third quarter, the world's best performing market by far was tiny Jamaica, according to a Bloomberg article. Its bourse with a $5.3 bn total market capitalization (the NYSE has $5.4 trillion, over 1000x as much), with daily trading ~$70,000, was up 1658% to Sept 30. There are all of 57 listed companies, but the big boom was thanks to only two of them, a cement firm gaining from economic reforms and the Dolphin Park group being taken over. But the good times also boosted the rest of the market and half of Jamaica's listed stock doubled while 8 went up even more. Now the mini-country wants to get its expat communities in the US and Britain to play stocks by creating an on-line trading platform.


Forecasts for 2016 interest rates are all over the map with the consensus expecting the Fed to raise rates to 2.75 to 3% by year-end. But some savvy investment banks like Goldman Sachs and HSBC think the Fed will move much more slowly, a year from now interest rates will only hit 1.5%. The main reason is that it costs the Fed money when it raises rates to pay interest on money banks deposit with it to keep banks from flooding the markets with loans leading to inflation. The current interest bill the Fed pays the banks is $12 bn, but that is at near-zero yield levels.


Chinese stock markets sank again today, by 2.6%, after the chairman of China Telecom (CHA), Chang Xiaobing,was taken into custody for an “investigation” which terrified investors. The government program of harassing oligarchs is continuing to harm global perception of Chinese risks.


More for paid subscribers today from Israel, Egypt, Britain (despite the holiday), Italy, Canada, Ireland, Spain, Portugal, Finland, China, Paraguay, Uruguay, Brazil, Argentina, Singapore, and Myanmar.

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Abdul The Bulbul

Mon, 2015/12/07 - 2:04pm | Your editor


While I admit it is in poor taste and politically incorrect, the 19th century silly song by Percy French is a fun commentary on the Turkish-Russian border incident. It goes:

The sons of the Prophet are valiant and bold

And wholly impervious to fear

But the bravest of all was the man I recall

As Abdul ben Bulbul Ameer.


If you wanted a man to encourage the van

Or harass the foe from the rear

Or to storm a redoubt, you had only to shout

For Abdul ben Bulbul Ameer.


There are brave men a-plenty and well-known to fame

In the army that's run by the Tsar.

But the bravest of all was a man by the name

Of Ivan Petrovsky Skevar.


One day the bold Russian just shouldered his gun

And with his most cynical sneer

Was walking downtown when he came right upon

One Abdul ben Bulbul Ameer.


“Young man,” asked Bulbul, “is your life just so dull

That you hanker to end your career?

For, infidel, know you have trod on the toe

Of Abdul ben Bulbul Ameer.”


“Go take your last look upon sky, sea, and brook

And send your regrets to the Tsar

For by this I imply, you are going to die

Sir Ivan Petrovsky Skevar.”


“Your murderous threats to me are a joke

For my pleasure and pastime is war.

I shall tread on your toes whenever I chose”

Quoth Ivan Petrovsky Skevar.


They then proceed to each kill the other. The old song resonates because both Putin and Erdogan are boastful and belligerent and risk going too far.


There lieth a stone where the Black Sea doth roll

And on it in characters clear

Reads: “Stranger remember to pray for the soul

Of Abdul ben Bulbul Ameer.”


A Muscovite maiden, her sad vigil keeps

In her home by the cold northern star.

And the name that she murmurs so oft in her sleep

Is Ivan Petrovsky Skevar.


Today is the anniversary of the Day of Infamy, the attack on Pearl Harbor. Nobody bothers with it anymore. It is also the first full day of Chanukah and the potato pancakes are wafting on air.


Dec. 13, luckily not a Friday, is St. Lucia Day, also celebrated by my Finnish-Jewish friend Seija, Finnish for Lucia. It is also the National Day of Saint Lucia, a Caribbean country which has the highest ratio of Nobel Prizes to population on earth.


Tomorrow morning there will be interruptions on our website because of technical upgrades by the host. I will not file my blog until afternoon as I will be attending the 2016 forecasts at Bank of America-Merrill Lynch, so there will be only late news, possibly after the market closes.


More for paid subscribers follows from Australia, Canada, Israel, Britain, India, Switzerland, The Netherlands, Ghana, Belgium, Italy, France, and China.

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