Breaking Bread Together

Wed, 2015/11/25 - 7:20pm | Your editor

The pre-Thanksgiving newsletter did not go out for some reason, perhaps related to traffic jams on the Internet. Here it is again:


When we lived in Paris we got to know the Arab League rep there, Mo (Mohammed) Tarbush. He used to grouse about the popularity of hummus bi tahini: “Not only did the Jews steal our land; they also stole our food.” My theory is that the ancient Israelites probably ate the mixture of chickpeas and sesame seeds alongside their neighbors. It was common across the Levant as far north as Greece and Turkey before it became a supermarket staple. But I never confronted Mo as he was a great source of information.

Now I am cheered up to discover that an Israeli store-owner will give a 50% discount at his popular joint, known for its good hummus, to any table where Jews and Arabs are dining together.

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Hummus bi Tahini

Wed, 2015/11/25 - 1:30pm | Your editor


When we lived in Paris we got to know the Arab League rep there, Mo (Mohammed) Tarbush. He used to grouse about the popularity of hummus bi tahini: “Not only did the Jews steal our land; they also stole our food.” My theory is that the ancient Israelites probably ate the mixture of chickpeas and sesame seeds alongside their neighbors. It was common across the Levant as far north as Greece and Turkey before it became a supermarket staple. But I never confronted Mo as he was a great source of information.

Now I am cheered up to discover that an Israeli store-owner will give a 50% discount at his popular joint, known for its good hummus, to any table where Jews and Arabs are dining together.


As I will dine tomorrow at the home of a strongly anti-Zionist relative, I figure that breaking bread together must be a good idea. I'm also feeling more like giving thanks because those involved in Turkey shooting down a Russian jet appears to be trying to cool tempers down. Everyone is fearful of World War III.


More today from Israel, Egypt, Spain, Britain, Australia, India, Canada, Mexico, and Germany.

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Turkey and Turkey Day

Tue, 2015/11/24 - 2:24pm | Your editor

After promising not to bite it,  the scorpion rides on the turtle's  back across the water. But then the scorpion bites the turtle despite his promise, so they will both drown. The poisoned turtle cries: “Why did you kill us both?” The scorpion replies: “This is the Middle East.”

Things are now getting complicated there. Thanksgiving may be suspended this year if there is a big Brussels-style lock-down in my city. We were going to go to Brooklyn relatives for a family feast. But now I want to warn my hostess:

Don't get up at the crack of dawn Thursday to roast that turkey now that Turkey (the country) has shot down a Russian jet. Turkey is a member of Nato and says it warned the Russian jet 10 times before taking it down with a missile for apparently violating its borders. The pilots parachuting out may have been shot by Syrian Turkmen  who were being bombed by the Russians who were supposed to hitting ISIS, not others.

Becky, check on the latest news before you light your oven to make sure we are not in World War III.

I don't want to give thanks for the worst confrontation between a Nato country and Russia in half a century. Nor do I give thanks for having been spared (along with my elderly Paris friends) from the horrific attacks on youngsters celebrating the start of the weekend.

As for Brussels, we lived there early in our journalistic careers, if in nicer areas than Molenbeek. In Sterrebeek where the official language was Flemish I had to learn a little routine before switching to English or German at the butcher, the baker, and the garage. French was completely forbidden. A country which cannot overcome the gap between its existing traditional language groups can hardly deal with people of different languages and religions.

Both Erdogan and Putin are masters of the art of bluster and misleading their people. So the threatened confrontation may not occur. If they kiss and make up I will even eat marshmallow-coated sweet potatoes But it is certainly too soon to give thanks. At this stage, I am not sure that Black Friday won't really be black.


On military matters, thanks to all the readers who backed my tirade against revisionist views of Woodrow Wilson at Princeton. I was asked for the source of my gossip about Baron von Steuben, whose descendents in the US, like the Du Ponts, became rich capitalists. The Steubens suppressed revelations of their ancestor's sexual peccadilloes back in Germany. He was probably not a baron but he did have military experience needed by the American revolutionaries.

Steuben (whether gay or a child molester) helped our Revolution. He taught Washington's men how to fight in squares. The front row would fire and then kneel to reload their muskets while the second row fired. Then the front line would stand and shoot while the second row reloaded. Repeat.

The Americans, used to fighting Indians and French frontiersmen, had not learned this war craft earlier. Lafayette, who volunteered at age 19 with the rebels, had never actually fought in a battle in Europe having missed the last war. He didn't know basic drill. I learned all this stuff about Lafayette and Steuben from Sarah Voyelle's book Lafayette in the Somewhat United States, a great read.


Now for the stock market. While war is said to be good for shares, it is not panning out today. Oily stocks are up along with gold, but little else. If you haven't yet bought into Israeli shares, today is the day for it. Israel has good unofficial relations with both Turkey and Russia and may act as an intermediary to defuse the situation.


Today the upward revision of Q3 GDP failed to boost markets. We report from India, Colombia, Mexico, Britain, Switzerland, The Netherlands, and Brazil.

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Update on Terrorism Sequels

Mon, 2015/11/23 - 2:40pm | Your editor

European stocks fell on the realization that terrorism is not going away. I predict the death of the open-borders Schengen accord, which allows free border crossing within a group of EU countries once a foreigner has crossed the border with the rest of the world at any one of them. Americans in Europe will have to keep their passports handy as they cross borders. And more inspectors in silly uniforms will have to be hired, which may help cut unemployment and boost inflation. '

In the end these trends are good for the European economies. Except for the tourism, luxury goods, and hotel sectors soon to be abandoned by anti-bureaucracy-minded Americans who want to kill the state sector beast without putting their own lives at risk.


Before I realized that my real life's vocation was journalism, a Woodrow Wilson Fellowship funded my MA in history. So I am appalled that the US president with the strongest academic credentials ever (although Dwight D. Eisenhower came close) is about to be removed from naming rights at Princeton University. Before he converted it the NJ, Ivy League outfit was only Princeton College, without graduate schools. My daughter-in-law's dad told us about the de-Wilsonization scheme at dinner in Boston.

Undoubtedly Wilson was a supporter of segregation, a century ago normal behavior for southerners. He was also a mistaken idealist believing that World War I could be a war to end all wars, when it turned out to be only a overture for World War II. He was an internationalist of the sort the USA has never accepted before or since who tried to get our country to back the League of Nations, a precursor of the UN. And being a male chauvinist he did not support American women's suffrage although after his stroke Mrs Wilson effectively ran the country for some months. Tsk tsk.

Retroactively imposing current day political-correctness rules on past US leaders sets dangerous precedents. Washington, Jefferson, and Madison owned slaves (other presidents probably did too but I only sure about the Virginians.) Jefferson also had a part-black underage slave mistress.

Lincoln was no abolitionist when he was trying to unify the country during his election campaign.

Ronald Reagan raised some taxes and negotiated deals with the evil empire despite current-day myths to the contrary. He also violated his marriage vows, as did Franklin Roosevelt, John Kennedy, and other inhabitants of the White House, not just Bill Clinton. For this in the 1960s Nelson Rockefeller's political career crashed. The rules change over time.

The German military man who helped the American Revolution, Baron von Steuben, was either gay (okay) or a child-molester (not okay) why he had to leave Europe under a cloud and bring his useful experience to George Washington.

Princeton is not the only US university with suspect endowments. Try Brown, Harvard, Yale, Columbia (initially King's College which tells you who started the place), and the University of Virginia, founded by Jefferson.


More for paid subscribers today from Cyprus, Egypt, Britain, The Netherlands, Israel, India, Panama, Cuba, Switzerland, Spain, Florida, and Canada.

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Yield Stocks

Fri, 2015/11/20 - 10:28am | Your editor

As I am off to Boston soon, you are getting a short blog today. My younger granddaughter is playing Cossette in a staging of Les Miserables, which we are going to see.

Congratulations to Michael Smookler for winning the Lilith auction for a free sub to this newsletter.

We have important news about ecology and Alzheimerar's disease for our readers. We have news from Britain, Israel, Switzerland, Germany, China, Brazil, India, France, and Mexico today.

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Special Yield Fund Update

Thu, 2015/11/19 - 4:44pm | Your editor

As I will be in Boston on Sunday I will not be updating the tables as is my wont. So to keep up with my moves in closed end funds there is a special table that paid subscribers may view showing our yield position changes. It can be viewed by paid subscribers at

Forecasts for 2016

Thu, 2015/11/19 - 2:41pm | Your editor

Moving toward the New Year means it's forecasting time. There are a dozen things one can already know about 2016 today. First of all, it will be a US election year which means policy will not be clear in many major areas as candidates jockey for support. Britain, which will vote on whether or not to stay in the European Community. With a new leftist head of its Labour Party and the threat of the nationalist UKIP party on the right, the Conservative government will also have to walk a fine policy line.

We know there will be higher US interest rates probably as soon as Dec. This will hurt the competitiveness of US manufacturing. Even in sectors like cellphone and internet technology or the sharing economy where we now lead the world, foreign copycats and rivals are coming up fast.

The election year means that US firms are unlikely to gain any respite from tax crackdowns or any reform of the often disabling impact of how Uncle Sam calculates what they owe.

It also means that Americans living abroad—whom I consider a national asset—will face continued harassment by tax regulators and obstacles to their having a normal financial and banking life. FATCA is stupid, but it is not going to be repealed in an election year, if ever.

The drop in US retail spending already discernible in the runup to Thanksgiving and Christmas may continue into 2016 as interest rates rise in this country, pushing up the price of US made goods and services, but playing into the hands of importers of cheaper foreign goods. What America makes will be less appealing at the very time when shoppers face higher costs of credit too. Retailing is also a problem in other countries like South Africa. And in the US and other countries the Amazonian competition looms large.

To continue to generate growth under these conditions, I expect that there will be more spending on the needed updating of infrastructure and electric generation next year and beyond, in the US, Britain, and many emerging economies.

In a US-UK election year continued focus on the appalling record of bank cheating of customers in the run-up to the global financial crisis means they will need more money for capital ratios, fines, and internal controls just at a time when the most lucrative business lines have to be restrained. But some finance sectors and some countries should avoid the worst of this crackdown.

The other demonized sector also deserves some of its ignominy: pharmaceuticals. Price-gauging against the sick and the government programs to cover their needs is scandalous. This will also color the election campaign in this country as people discover how much more insurance will cost them next year as a result of the evil-doers.

The global risk of terrorism will increase if only because criminal Islamist men are tempted to copycat other criminal Islamist men who have gained notoriety. While the Ten Comkcular. (The only unhedged prohibition against murder is the Hansel and Gretel situation: Muslims are never allowed to kill their children, a useful rule given the ancient world's habit of child sacrifice, which misled even Abraham-Ibrahim, the founder of monotheism who was ready to sacrifice both Isaac and Ishmael.)

The likely continuation of ISIS and its fellows means European and North African tourist destinations will lose clients to supposed safer places, affecting airlines, hotels, and economies overall. No Pyramids next year! No Black Sea cruise! Flying anywhere will be a hassle after the Russian plane crash everyone agrees now was a terrorist act.

One lovely destination is newly opened to law-abiding Americans: Cuba. Latin America and the islands (not just Castro's) will get some of the tourist business lost by Russia, Turkey, and Egypt.

A related issue is global energy dependence, not only on the Persian Gulf monarchies, but also Putin's Russia. How these countries will be viewed as the US election campaign gets going is beyond my power to guess. But I have a few ideas here too. The global alignment is definitely in flux.

It is likely that the problems of the left-behind under-educated white American males will become a campaign issue. They are dying at a record rate mostly from self-destructive causes ranging from smoking, and drug addiction, to suicide.


I forgot to mention that Volkwagen has a long way to go winning back customer confidence.


More for paid subscribers follows from around the globe in partial answer to the forecast trends I expect. Including one stock buy now for next year's trends. There will be a truncated report to paid subscribers tomorrow because I am heading to Boston to see my younger granddaughter perform on stage. Today's news is from Israel, Ireland , and India (but not Italy), Britain, Germany, and France, Egypt and Mexico, plus Colombia, Panama and the USA (for Cuba),

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Malkiel and Me

Wed, 2015/11/18 - 4:08pm | Your editor

The Federal Reserve Open Market Committee appears to be ready to cut interest rates next month according to October 27 minutes published today. We wrote on strategies for a higher yield environment over the past few issues. Yesterday we said to buy emerging market bond funds.

Adding emerging markets to a global portfolio could reduce risk, while the capital Capital Asset Pricing Model data suggests emerging markets could yield attractive long-term returns, Burton Malkiel wrote on ThinkAdvisor today. I wrote about the appeal of some vehicles for buying emerging markets debt yesterday without waiting for support from the renowned author of A Random Walk Down Wall Street. But I am glad he likes the same sector.

An emerging market country I like to invest in is Mexico. Today Dow-Jones reported on a study published by the Bank of Mexico, its central bank: Read more »

Year-End Strategy

Tue, 2015/11/17 - 2:04pm | Your editor

The new Portuguese government is the first since the Cravos (Carnation) Revolution of 1974 to include Communists in coalition with the more moderate left. Unfinished Portuguese business after the 2008 global economic crisis includes deciding what to do about the Espirito Santo banking clan whose bailed-out bank, renamed Novo Banco, is proving to be hard for the Lisbon government to sell at a high enough price to recoup its outlays.

BES bank before the crisis funneled cash raised with bond issues from small depositors to Espirito Santo family holdings (most incorporated in Luxembourg, the nearest Euro-zone tax haven). The bank was allowed to issue these bonds by the Portuguese central bank, which then had no alternative but to rescue the Portuguese bond-holders. Foreigners and institutions were left hanging out to dry. And the Espirito Santo family managed to cash out of non-financial holdings, in hotels, hospitals, Brazilian land, and Portugal Telecom, whose shares we recommended. The family won bankruptcy protection from a Luxembourg court and the looted assets were sold to investors from Brazil, Thailand, Luxembourg, and Mexico. The central bank and the shareholders of PT (mostly Portuguese, but there was also an ADR) got nothing, nada. The present family head. Ricardo Espirito Santo Salgado, which masterminded much of the fake bond issue, retained his posh seaside residence at Boca do Inferno, in a Lisbon suburb.

The Espirito Santo clan's rescue reminded my husband of their earlier role, before and during the Second World War, during the reign of dictator Antonio Salazar, an economist. The then head of the bank, the English-speaking Ricardo Espirito Santo, did nothing without Salazar's approval. He began by providing a haven for the recently deposed Duke of Windsor and Mrs. Simpson in Boca do Inferno (which goes with the job) and ferrying them around nightspots at his expense. When the war broke out, they were removed to Bermuda to stop Nazi plots to use him against his brother who had become king. Espirito Santo was an intermediary between Germany which needed Portuguese tungsten for its war machine, and its miners. He and the Portuguese central bank were paid with Nazi-imprinted gold bars, most stolen from conquered territories or dead Jews.

Portugal was formally neutral in World War II, allowing two of my German Jewish grandparents who fled Nazi Germany to embark for America from Lisbon. While the British and later the Americans did not need tungsten, they wanted something else from Portugal: to lease a port and later an airbase on its Azores islands in the mid-Atlantic. Again wealth flowed to Portugal with the Espirito Santo's taking a cut.

Not too surprisingly, after Salazar's death and the Cravos Revolution, the Espirito Santo family took refuge in Brazil before being welcomed back when the center won elections against the left. Family head Ricardo Espirito Santo Salgado got a stake in Portugal Telecom by organizing its privatization---and then wheedled his way into control of its finances.

Your editor got PT very wrong. We wound up with only pennies from our ADRs. My mistake was assuming that shareholders in the troubled Portugal telco would be given the same level of protection as we had received earlier from Telefonica of Spain over its troubled sub, Telefonica de Argentina. I assumed shareholder protection in mother countries was as high as it was in former colonies.

Now the chickens have come home to roost. The CB, having funded Novo Banco with money it cannot extract from any likely buyer, is as embarrassed by letting the BES borrow as it would be if anyone looked closely at the markings of its gold bars. The stock exchange regulators are still facing claims from PT shareholders in Portugal. The center-right government which let all those family assets go has been defeated. And the Luxembourg prime minister who created the country's haven laws is now head of the European Commission in Brussels. There will be more sequels in the EU and Lisbon.


Yesterday's broad global stock market rallies were to show up ISIS which was trying to scare investors. Today's moves are internally generated.

Today's paid blog is about how to plan for the end of 2015, particularly what to buy. We also have news from Switzerland, Britain, Canada, Mexico, Colombia, Australia, Brazil, Panama, Israel, and Italy.

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Mea Culpa

Mon, 2015/11/16 - 1:48pm | Your editor

Mea culpa. Trying to be too clever by half (and wicked), I utterly failed Sunday to predict how global stock markets would react to the horrors of the Paris terrorist attacks. Markets remained normal except for a boost in the price of oil, related stocks, and gold, which rose. How very 1973! Middle East trouble means you buy oil. But you don't sell insurance shares.


Today to change the subject we have a report on Thailand where for the moment we have no positions in the model portfolio, although some readers (and me) still own stocks traded in Bangkok bought with our now defunct Minutewoman newsletter. It covered markets not accessible to US retail investors, like Thailand. The share we own is Demco PCL, recommended by our former contributor in Thailand, Paul Renault. I hold it through my person account with HSBC which used to have a brokerage in Bangkok, now closed. It is very expensive to trade in Thailand with HSBC, as I discovered with a sale earlier this year of a stock Paul lost his taste for.

Paul (editor of writes:

“The Thai stock market lacks direction, yet is resilient after declining like all markets from Aug to Oct. There could be another short lived selloff but 2016 looks better. The worst is over.

"China's true overall growth rate remains uncertain, along with the world's. Stability has returned if at a lower level for now. Thai VAT [sales tax] receipts and consumer spending have turned positive. This is a market of stocks more than a stock market. We own shares of companies which promise growth in earnings and dividends. One factor I like and understand is streamlining. And sectors like green energy and infrastructure which will boom next year regardless. My Thai favorite picks are Demco, TRC, DCON, and WHA, plus micro-cap CRANE (the leading operator of cranes and heavy construction equipment here.) TPCH is bringing on very interesting projects in biomass where earnings are bound to explode next year. Cash dividends should be similar or even better than last year on my favorites and grow due to expanding earnings.”

“Paryuth [ed: Chan-O-cha, the head of Thailand's military junta] plans to spend $83 bn over the next 7 years on railways, roads, and customs posts for cross-border trade routes to link some 2.4 billion consumers in China and India with Asia’s newest grouping, the 10-country ASEAN Economic Community (AEC), of which Thailand is a member. AEC is set to open for business next year. It boasts a combined economy of $2.3 trillion. Sitting at the heart of the AEC, Thailand is less than [ed: 320 miles] from China.”

[Ed: One of the border areas Thai Gen. Paryuth also is investing in is at Mae Sot on the road to Myanmar, formerly Burma, creating a special economic zone (SEZ) near where its Karen insurgents fight for independence and smuggle weapons, opium, and gemstones. This is one of 10 SEZ's which the junta is backing oblivious of the changes in Myanmar.

Thailand has not been immune from terrorist attacks either.] Back to Paul:

Thailand has a democracy issue overhang but also stands to gain from events in Myanmar. Thai border trade is surging as less developed neighbors’ economies expand at double, even triple, Thailand’s rate. In the first 8 months of 2015, Thai sales to Myanmar, Vietnam, Cambodia, and Laos jumped 8.1% to $14.5 bn and accounted for 10% of Thai exports. Myanmar will grow 8.5%, according to the World Bank, faster than even China or India.

"Seriously rich Dhanin Chearavanont, Thai chairman of Charoen Pokphand Group, is building an industrial estate on the former Burma road. Another publicly listed company, Saha Pathana Inter-Holding, already opened a modern, air-conditioned factory center, a far cry from the Asian sweatshops of yesteryear. Young Myanmar immigrant women, immaculately dressed in traditional sarong-like longyis, turn out Guy Laroche handbags, Arrow shirts, Polo socks, and more.”

[I supplemented Paul's report with uncensored background from Singapore's]

More for paid subscribers from Israel, Britain, The Netherlands, India, Canada, Colombia, Italy, Panama, Denmark, Ireland, and Myanmar.

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