Elder Statesmen

Fri, 2017/10/20 - 1:41pm | Your editor

Pres. Trump has been criticized in public by his two predecessors, Barrack Obama and George W. Bush, both of whom cited his divisiveness. I imagine they coordinated their statements. House Speaker Paul Ryan used his speech at the Al Smith dinner last night to also roast the president.

Elder statesmen have a role to play in the US and with John McCain fighting a fatal cancer, they opted to fill the gap.

As we have three company results to report on, I will leave you to consider the significance of these attacks on the president.

We have results from Panama, Switzerland, and the Dutch Antilles, all tax havens but also the home of real companies, plus news from Canada, Britain, Brazil, Germany, Hong Kong, South Africa, Australia, Ireland, Finland, Israel, and Russia. We start with the results:

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America First

Thu, 2017/10/19 - 1:01pm | Your editor

Reader FBN of Long Island sent a note about why America is first which may not convince the White House to stop trying to block environmental protection laws. A new study by Mark Wall and his macro team at Deutsche Bank looked at how easy or hard it is to do business in different countries. The US remains number one in 2017 despite the near doubling of regulations in the period since 2010.

US reforms under the Obama Administration increased red tape particularly for financial firms in the wake of the global financial crisis but the obstacle level was vastly lower than that for any other country surveyed.

Among developed nations, red tape was cut by Greece, Italy, Spain, France, Portugal, and Germany. However they all at least twice as many business hurdles as the USA and often the reductions were modest (for example in France which is ranked 31st). In the over-regulated Club Med countries and Portugal, reforms were not sufficient to really reduce the obstacles. Greece was No. 60 in the ranking for ease of doing business today: Italy No. 52, Spain No. 62, and Portugal No. 30.. Note that a history of protectionism by governments of the right remains an obstacle to ease of doing business in southern Europe. Ireland and Britain are the only countries close to as open as the US.

While FBN and Mark Wall may not agree, I think opening a Pandora's box of measures to restrict trade will eventually hurt the competitiveness of US business. While Trump talks a good line over deregulation in fact his policies on borders—fence and tariffs—is going to hurt US business competitiveness in the end. Immigration obstacles ditto.

I find Steve Mnuchin's theory that tax cuts have been “baked into” the price of US stocks to be simplistic. The Treasury Secy has to sooth the ego of his boss, but the rise in stocks has been because of the Trumpian governmnet disarray but in spite of it. And Mnuchkin at some point has to warn his boss that tearing up trade agreements will not be good for US business.

 

*After IBM bounced high yesterday it bounced some more today. And another Dow monster, GE, is also up. And (hip hip hooray) The New York Times has cleaned up its Business Day stock tables after I sent its PR a copy of yesterday's blog.

 

More for paid subscribers from Britain, Canada, Chile, China, Denmark, France, Germany, Hong Kong, India, Ireland, Israel, Spain, Sweden, and Switzerland.

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Feuding Gold Bugs; Apologies to Microsoft

Wed, 2017/10/18 - 1:02pm | Your editor

I wrote to the NY Times because its Business Day section is taking to publishing stock tables which are wrong. The Most Actives, Gainers, and Losers shown on page 8 of my newspapers yesterday and today only show shares whose ticker symbols begin with the letter 'A'.

The newspaper replied to tell me if my “letter is selected for publication... we will contact you within a week.” Nobody bothered to read it. Moreover, since I do not have a telephone number they can dial to check on me, probably it will never be acted upon.

I have to subscribe to the Wall Street Journal instead, which I now only buy based on Dow-Jones tabs about our stocks.

I'm sorry about having been rude about Microsoft yesterday. Unlike the other service providers which cop out they really did help me even though it took ages on the line to the Philippines. For why, read my blog for subscribers below. Or subscribe.

The function of customer service has been reduced to form letters—and form phone calls. Our telephone lines were not restored as promised for Monday or Tuesday and we are back in begging mode. They were supposed to come yesterday before 5 pm but did not show up and nobody bothered to call us up on our cellphones to tell us this. Now they are planning to come in mid November but have graciously offered to link our cellphones with the dud lines. You can now call me up.

 

We managed to get to the Balliol farewell for my husband's college's last male master. The next on is a lady. At Oxford, students live in different “colleges” which give them their diplomas. Balliol is known for its “effortless superiority”, whatever that may mean. At the party here I met a younger Balliol man manager for a US bond fund for BNP-Paribas. I asked him what a senior like me should be buying in the bond arena when US interest rates are rising and he replied, effortlessly, “Nothing.”

Actually you might consider Pimco Total Return Fund which Bill Gross walked away from in Sept. 2014. It is beating its indexes again under Daniel Ivascyn and his team which succeeded Gross. It does so with 2 kinds of short: first a 12.2% short position in international developed fixed income bonds, and second a 26.4% short position in short-term instruments.

In effect it is doing what the Balliol man suggested makes sense, by being nearly 30% short in the fixed-income field. We do not cover open-end funds like PTTRX, which mostly invests in the USA. It pays dividends monthly, so this note is for general consumption. Frank Talbot of CitywireUSA.com/ helped.

 

More for paid subscribers follows from Australia, Bermuda, Brazil, Britain, Canada, Denmark, Finland, Hong Kong, Iraq, Ireland, Israel, Mozambique (a first), Panama, Russia, South Africa, and Spain.

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Macro-Hard Strikes

Tue, 2017/10/17 - 2:37pm | Your editor

Overnight Microsoft updated my windows computers and as a result I could not sign in to either my desktop or my laptop. I then spent more than an hour talking to Marc or Mark of Microsoft in Manila to get back access to my computers. You will recall that our phones are not working so it was mostly a matter of proving I was me, but the system is awkward, circular, and annoying. Macrohard strikes again.

As a result, today's blog will have to be truncated as I cannot write enough before the market has closed against us.

 

Airbus is taking a stake in Canada's Bombardier which was facing a crash after the US imposed hefty tariffs against it because of subsidies it got from Quebec Province, where it is HQ's, and Britain, where it has plants in depressed Northern Ireland. The duty resulted from an initiative from Boeing which will be the loser from this alliance. It is not only The Donald who shoots himself in the foot.

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We have news from Brazil, Canada, Chile, Denmark, Hong Kong, Israel, Russia, South Africa, Sweden and two quarterly reports to cover today.

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Greetings and Revisions

Mon, 2017/10/16 - 4:17pm | Your editor

The Model Portfolios posted in a hurry Sunday have had to be revised because of errors. I corrected them Monday. Please visit wwww.global-investing.com to view them. Everyone can see the closed positions table in all its glory but only current subscribers may view our stock and bond holdings. The funds table did not contain any errors that I know about so it is unchanged.

Sorry about that. I was hurrying off to a lecture. To give you more to mull over I included closed positions back to the start of 2012 so you can see that our performance is not a fluke but the result of a repeatable process.

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Another US Record?

Mon, 2017/10/16 - 1:48pm | Your editor

In 1988, on assignment from the then independent Herald-Tribune of Paris, I visited Spain to interview its business heads. Among them were “Veuves Clicquot” Pilar Ferrer and her mother-in-law Dolores Sala who took over managing the Catalan vineyards in San Sadurni de Noya after Pedro Ferrer and his son Joan Ferrer were killed by the Spanish fascists in 1936.

In those days the maker of “Freixenet Cava”, a sparkling wine which the European Union did not let them call champagne, was strongly pro-Catalan. I was given a little history book published by the winery in “Gener 1988” (January 1988) about “xampany” (champagne in Catalan). Dolores and Pilar had by then been replaced by a corporate board of men and Freixenet was opening new vineyards in Mexico, but Catalan linguistic rights were still not guaranteed by Madrid.

So I was struck today by the fact that Freixenet is one of the companies planning to exit Catalonia if it declares independence from Spain. Of course by now Spain has accepted far more autonomy for Catalonia than then. So now family history is obsolete and the business must be able to export within the EU. They no longer support Catalonian independence or “Catalexit”. But they do want to produce Xampany “per molts anys!” That is a Catalan toast you say on a birthday, I learned from my book, meaning many happy returns. I was thinking of blackmailing the current management into buying back my copy.

I also visited the Basque Country where most of the heads of business were priests, because the companies were cooperatives founded by the Church. But that is for another day. Basques were then producing electrical household equipment like refrigerators and washing machines but that business has moved elsewhere.

 

There is a message here for fringe economic outposts, among which is New York where I hang out. The island of Manhattan is a fore-runner of the US economy overall just as, back then, Catalonia was a bellwether for Spain, and Hong Kong one for China.

 

More today from ECTRIMS and ACTRIMS, Britain, Ireland, Israel, Switzerland, Hong Kong, and India, and, because of the extension of the talks on renewing Nafta, special reports on Mexican and Canadian stocks. After my moan about price drops for T, VZ, and GE yesterday, they are all up today because US market levitation depends on the classics. Hence today is a key: if the Dow goes up there will be another record day. And if it doesn't we have more reversals to come. Of course this all makes global investing appealing because foreign markets at not at skyscraper levels.

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Sunday Duty

Sun, 2017/10/15 - 11:29am | Your editor

 

Today we are going to the opening of a celebration of German-Jewish emigration to the USA which is not being held in Washington Heights, the northern Manhattan area where my parents' generation settled, mockingly called “the 4th Reich”. Instead it will be at the Center for Jewish History at the edge of Greenwich Village.

 

So the tables are being prepared on the fly and may be less than perfect, among other things because overnight some updates from Windows 10 screwed up my computer. Please visit www.global-investing.com to view the tables.

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Oil and Beer

Fri, 2017/10/13 - 1:15pm | Your editor

Not only is it Friday the 13th, but also my phone service was not restored by the technician who came yesterday. Instead of linking our existing lines to the world he set up a new link to a (gasp) 646 number rather than my 212 one. As a New Yorker I want a 212 number, and moreover one with the old chic Plaza code. 646 numbers are for refugees from Queens like the President.

Japanese brewery Asahi is proposing to sell its stake in Tsingtao Beer, what I have felt was the accompaniment to Chinese food since I first tried eating it. It was founded by Germans in 1903 in the city now called Qingdao. Asahi wants to offer Chinese a chance to quaff its own branded brew.

Another bit of bad news is that Saudi Aramco may not do an ipo after all. This was supposed to be a part of the modernization of the Kingdom after women are allowed to drive. This was reported by one of the leading newspapers in London, the Financial Times. Saudi Aramco was considering a listing there or on the Big Board and investment banks were savoring the prospect.

 

More for paid subscribers follows on beer and other things from Europe, the Middle East, the Far East, Latin America, and Canada.

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More from Thaler and, alas Navellier

Wed, 2017/10/11 - 1:30pm | Your editor

It turns out that Nobelist economist Richard Thaler was willing to make a prediction about the stock market outlook after all, in a Bloomberg TV interview. “We seem to be living in the riskiest moment of our lives, and yet the stock market seems to be napping,” Thaler said, in a phone conversation. “I admit to not understanding it.”

The S&P 500 index has been reaching repeated records since the election last November amid steady growth in the U.S. economy and labor market, and anticipation of lower taxes, though until now Washington has not done much.

Thaler, who won his Noble for studying irrational and temptation-driven actions in markets, expressed misgivings about low volatility and continued investor optimism. “I don’t know about you, but I’m nervous, and it seems like when investors are nervous, they’re prone to being spooked,” Thaler said, “Nothing seems to spook the market” and if the gains are based on tax-reform expectations, “surely investors should have lost confidence that that was going to happen.”

This is of a piece with Prof. Thaler's statement yesterday that he will spend the ~$1 mn Nobel Prize money “irrationally” rather than turning it over to one of the funds he advises.

 

A mini-Madoff was sentenced to pay a fine of $35 mn by a Boston court after charges were brought by the SEC against Howard Present of F-Squared Investments of Wellesley Mass. Present has to disgorge $35 mn for fabricating a 7-year track record for the fund sent to clients and potential clients. He claimed that its “AlphaSector” Strategy had been in use from 2001 to 2008 to switch between sector exchange-traded funds. In fact heand another man  made the results up using backtested data rather than real investments.

Louis Navellier, a fellow newsletter editor, alas, was also charged with fraud by the SEC for claiming his Viero AlphaSector ETF used AlphaSector stratgegies from F-Squared when in fact they could not be substantiated. Navellier sold his Vireo fund to F-Squared for $14 mn in mid-2013 despite knowing the results were faked.

 

More for paid subscribers follows from China to Finland, from Japan to Chile, from South Korea. There will be no blog tomorrow either because of Simchat Torah or because I have to be on call for the umpteenth time for (I hope) relinking my office and apartment telephone lines which have been out of order since Sept. 5!

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The Maltese Falcon and Turkey

Tue, 2017/10/10 - 1:54pm | Your editor

Readers had a lot of fun with my blog of yesterday, sending me notices that “the end is nigh” and commentary belittling the importance of “nudge”, Nobelist Richard Thaler's insight into behaviral economics. I misstated one thing: Prof Thaler is not necessarily going to put his money where his mouth is, into Fuller & Thaler Behavioral Small-Cap Equirty (FTHNX) and the Undiscovered Managers Behavioral Value Fund (UBVAX). Instead, he told journalists he intents to spend his Nobel prize funds “irrationally”.

 

Today's blog is about Turkey, Malta, the Vatican City, Israel, Bermuda, the Dutch Antilles, and a few other places.

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