Putin's Trappist-1 Planetary Plans

Wed, 2017/02/22 - 1:55pm | Your editor

Bill Browder, the grandson of a Washington Heights neighbor Earl who was deported with his family to Britain for heading the CP USA when Donald Trump and I were children, today asserted that the President of Russia may have accumulated a fortune double that of Bill Gates, at $200 bn, in Swiss bank accounts. This was reported by IBTimes.com. Bill Browder ran the Hermitage Fund which invested in Russia before its lawyer was killed in custody. Now a movie of Browder's life is being planned.

Vladimir Putin meanwhile plans to rocket to one of the ecoplanets of Trappist-1, a nearby star, if he loses power and wealth. I am including this clickbait and lots of gossip today to get IBTimes to quote from www.global-investing.com/ 

Today while reading my newspapers I got shocks. Firstly, the Financial Times reported in its US tables that Comcast shares had lost half their value yesterday. I own the shares but they are purely USA so I don't watch their news and performance as part of my job.

The other shock was what I was asked to swear to when I went into my brokerage account at e-trade to check up on CCV. I was asked to agree not to republish any of the price data from the NYSE and the Nasdaq that I got from their website. While I signed, I need to consult my attorney. While I do not manage money or engage in advisory operations, I do check out stock prices when I write up a share (or bond) in this newsletter. While the price data is sold to professional investors by the markets—a way to make money—the delay between my getting the prices and your reading them here would seem to remove any violation of copyright.

In fact the CCV stock split 2:1, which only goes to show that the stock tables in the pink British newspaper are put together by mindless robots, as I have long suspected.

Violating copyright is not something I do lightly given how many times we had to go after readers who re-distributed a paid subscription for their own benefit or who reproduced our recommendations in other formats without attribution. I once went after the SEC for violating the copyright on our coverage of American Depositary Receipts, which merely resulted in our having our federal taxes audited for the following decade. They used the copy filed for copyright (when we were a print publication.)

However, given the inadequacy of the prices I get from e-trade (which requires that I use other sources to prepare our weekly performance tables) I think I'll wait till they come after me.

More from Europe and America and the rest of the world today.

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Fiddles from the Portuguese

Tue, 2017/02/21 - 2:13pm | Your editor

With apologies to Elizabeth Barrett Browning, today's lead articles are about Fiddles from the Portuguese. Today we learned that Brazil is having to import lower grade robusta coffee beans to feed its instant coffee roasters because Brazilian arabica beans would make the mixture too expensive. The lesson is that you should never be surprised at what happens in Lusitania, the parts of the world where they speak Portuguese. To keep the instant coffee cheap enough, they cannot use Brazilian beans although of course the labels will still read “Made in Brazil”.

Another example. The Portuguese central bank selected Lone Star, a US fund, as the final buyer of Novo Banco, created 3 years ago by the euros 4.8 bn bailout of Banco Espirito Santo. BES looted its customers with bonds whose proceeds were stolen and also took the cash of NYSE-listed Portugal Telecom, which we owned shares of at the time. BES's dominant Espirito Santo clan used a Luxembourg holding company to stash the ill-got cash. Under European Union rules the defrauded Portuguese who bought bonds, or the defrauded Americans who owned NYSE-PT could do nothing to extract assets in Portugal and Brazil held via Luxembourg, a tax haven.

Now, however, the Bank of Portugal is under the gun to sell down its 100% stake in Novo Banco to make sure that the state-owned bank doesn't offer better loan and savings products than the private banks it competes with. The European Union deadline is this August.

Novo Banco was bid for by Chinese outfits and other US hedge funds, and reportedly Lone Star came closest to taking control, offering to buy 65% of the bank for euros 750 mn on condition that the Portuguese government keep the rest and go on covering the bad debt and litigation risks left in their wake by the Holy Spirit oligarchs.

Lisbon's “Fed” is hoping to raise the price to euros 1 bn, still barely 20% of what the bailout cost it.

Neither Lone Star nor the Portuguese CB will comment publicly. The Social Democratic opposition party leader in a TV show revealed the current negotiations between Lone Star and the CB. To cover the Espirito Santo theft, the Portuguese Central Bank has to get permission from the EU, whose Commission is headed by a Luxembourger.

 

The common key in these two notes is that in Portuguese, things are not always what they seem. Another example from our portfolio follows for paid subscribers from Portugal, Brazil, Britain, Israel, Panama, Mexico, Spain, Finland, Norway, Germany, India, Finland, Israel, and Colombia.

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Sunday Update

Sun, 2017/02/19 - 1:40pm | Your editor

Having a long weekend ahead (Monday will be spent with family) I decided to improve our tables by seeking out obscure net asset value data first for US-listed funds (increasingly poorly covered by Barron's because unlike open-end and exchange-traded funds, closed-end funds tend not to buy ads.) But once on the hunt, I also found net asset value data for our oddball funds: REITs investing in India, Europe, and Mexico; British investment trusts; and a pair of Nordic holding companies. Note that some of the NAV data is dated, back to the close of 2016 or of January. So don't take action based only on the discount--or a premium.

More for paid subscribers follows from the stock and bond side of the portfolio including hot news which would otherwise have been written up on Monday, from Israel, Mexico, Canada, South Korea, Britain and Germany. Non-subscribers can tomorrow read Friday's edition at http://talkmarkets.com/content/global-markets/the-norsemen-and-mounties-are-coming?post=122810&uid=4662 Read more »

The Mounties and Norsemen Are Coming

Fri, 2017/02/17 - 3:54pm | Your editor

Today is a busy one because Monday is a public holiday celebrating two of our presidents, Washington and Lincoln, giving us a chance to take a break from their current successor's rants and raves against, among other fiends, the free press, of which I am a part. The markets are digesting big news, including a bid for Unilever by Kraft and, in our case, lots of quarterly and annual reports.

And with a holiday coming, equity traders are busily locking in some recent wow profits with sales, taking down the markets to take some money off the table, not just in Trumplandia, but world wide.

The dollar is down too, maybe because of terrifying press conference and the clear disarray of the current administration.

But we have to get busy with annual reports from our companies in Panama, Mexico, Israel, Brazil, and Germany—a full deck—and cover important news from other areas. There will be no blog Monday. We also have a new stock pick in anticipation of St. Patrick's Day, from Ireland. Plus an explantion  of my headline.

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Global Perils

Thu, 2017/02/16 - 2:07pm | Your editor

A yellow warning light was illuminated today by BofA-Merrill after Fed Chair Janet Yellen's Senate testimony yesterday and the day before. She said it would be “unwise” to delay interest rate increases as the economy grows more strongly. The Thundering herd now thinks that the probability of a Federal Reserve interest rate hike next month has risen to 44%.

The stronger CPI which doubled to 0.6% in Jan. from 0.3% in Dec. and the nice 0.4% Jan. retail sales growth figure, both out today, further increased the odds on a Fed move to tighten. Year over year, the consumer price index rose 2.5%, hardly signalling a need for more stimulus, even though half of the rise was the direct or indirect result of higher gasoline prices. It's the other half which is worrying the Fed, particularly the fact that men's clothing costs rose by a record monthly amount.

US 10-yr Treasury notes are now yielding 6 basis points more than at the start of this week, luring in more foreign and US investors who also are adding to the upward trend of bond yields and the lower trend of both the dollar and bond prices.

The impact on stocks is the reverse. Costlier money and a lower Greenback tend to drive down share prices.

Inflation is coming to my business too. Paypal (now a stand-along company) will increase its transaction fees for online purchases from 3.9% to 4.4%. Moreover products sold across borders—including newsletters like my subscription one—will incur fees of 4.5% to 5% plus 30 cents.

All these new charges go into effect March 29. To avoid them, subscribers should renew early, before the notices go out. Our system is smart enough to tack your new subscription on to the end of your old one. And if you have been considering becoming a subscriber, do it now to save money.

Since we also pay come of our non-US based writes using paypal, to keep our contributors happy we have to also pay the higher fees for some of them. More about the problems of going global below fore paid subscribers along with news from Panama, Sweden, India, Chile, Argentina, Spain, Finland, Germany, Canada, Britain, Spain and Japan, including a reporting company.

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I Am Honoured

Wed, 2017/02/15 - 2:42pm | Your editor

Having grown up during the fiercest period of the Cold War, I can appreciate that another 70-year-old might want to try to restart US-Russian relations. In fact both George W. Bush and Barrack Obama had the same idea. But the shambolic mismanaged Trump Administration has so poisoned the air that the chances of working with Putin have now actually been reduced.

Russia has gained little in the end with its secret violation of the Start Treaty (which the Obama Administration tried to deal with quietly.)

Putin has gained little with his likely authorization of hacking of the Democratic National Committee and Clinton staff emails.

The Kremlin has not won any points after the Obama decision to expel its diplomats did not lead to similar expulsions of US ones.

Trump no longer can reduce pressures on Russia to exit the eastern Ukraine or even Yalta.

Russia actually lost rather than gained from its illicit links to Trump supporters and future office holders, who will now have to be purged.

So unlike Pres. Trump I don't think Vladimir Putin is smart. I think he is a KGB-trained thug. Unlike in Russia, Stalinism doesn't work in a country with a free press and an active opposition and institutions which cannot be cowed by firing people. Which happens to include the USA, Germany, France, South Africa and a few other places where Russia is trying to influence policy with secret deals and covert payments.

Team Trump threatens everything from vaccinations to educating our young, from supporting national healthcare needs, to letting people regularizing their immigration status to green card holds to children raised in the US after they were illegal sneaked in by their parents avoid deportation or bans.

And apart from Russia and the Muslim World, the Trump Administration has done a lot of diplomatic damage in its short term of office to date. A senior Mexican economist at the respected CIDE institute now says consumer confidence there is so low that there is a 35% to 40% probability that Mexico will go into a recession, according to Raul Anibal Feliz. The unprecedented drop in Jan. will cause slow-downs in manufacturing and services for the local Mexican market, he warns. He predicts that in the next few months, without a reversal, Mexican growth will fall to between 0 and 0.3% annualized.

 

*In its Feb.10th issue, Investor's Digest of Canada named Global Investing as “Letter of the Week” for my writing about the new US Administration and its confused relationship with Canada and Mexico over NAFTA. I am honoured. More on Mexico and Canada follows in today's blog with news from our portfolio companies including an annual report, plus musings about Norway, Russia, Israel, Brazil, The Cayman Islands, Japan, India, Finland, and Sweden. And about Edelweiss.

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Valentine's Day Misses and Missiles

Tue, 2017/02/14 - 2:23pm | Your editor

The Russians appear to have violated the 1987 Start Treaty by secretly deploying a land-based cruise missile in 2014. The Putin-smoochin' White House, which has just lost its National Security Advisor Michael T. Flynn for undisclosed links with Russian diplomats during the Interregnum, now has to deal with this Cold War-style challenge from the Kremlin. Mr Trump in his telephone conversation with Vladimir Vladimirovich seemed to think the treaty was called “Start-Up” and seemed to be pretty out of it as the Russian sought to get his agreement to extend the deal for 5 more years without stopping his land-based cruise missile program.

The Obama Administration tried to persuade Russia to stop the development of the missile, without success. You can also worry about China and North Korea making aggressive moves against the US and its allies.

Happy Valentine's Day. Coupled with hawkishness from Janet Yellen of the Fed, who said that there could be a rise in US interest rates soon, the Russian violation has taken down US markets after yesterday's bullishness. Foreign markets were mostly closed, except for Americas ones, when the news hit.

 

Today we have 2 quarterly results from companies using a fiscal year ending in March, one good, and one less so, along with upgrades on our latest buy pick and news from Canada, India, Finland, Germany, Britain, Israel, South Korea, Brazil, Australia, and Bermuda. We also have a couple of ideas which are hard to implement or which are better left to others.

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So-Called Justice

Mon, 2017/02/13 - 1:57pm | Your editor

The Trump “so-called judge” controversy is not new. What the President meant to say was “so-called justice”, a term used by his predecessor in the White House back in 1937 when his New Deal programs were blocked by conservative Supreme Court Justices. FDR sent a bill to Congress to add another six justices to the Supremes. He lost that vote because many Democrats opposed the measure which was locked in committee by Chairman Harry Ashurst who famously said: “No haste, no hurry, no waste, no worry.” It sat in the Senate Judiciary Committee for 165 days.

However, in the end FDR did get his way since one of the Supremes, Associate Justice Owen Roberts, switched his position to support New Deal measures like a minimum wage..The packing of the Court never took place the way Roosevelt intended, but the fact that it was even being considered caused the Supreme Court to take the law of public opinion into greater account, something which has characterized the third arm of US government ever since.

Current Supreme Court Chief Justice and swing voter John Roberts, no relation, studied under Owen Roberts. And Neil Gorsuch, the Trump nominee, studied under John Roberts. The Roosevelt attempt to control the third arm of government was defeated on constitutional grounds. The Congressional blockage of the Obama nominee last autumn was the closest we have come to a packed court since FDR tried it.

 

More including an important annual report follows for paid subscribers follows from Brazil, China, Spain, Germany, Israel, Canada, Britain, Switzerland, Mexico, Chile, Denmark, Bermuda, India, Australia, Denmark, and Finland. We also have a new pick from our new reporter today.

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Sunday Tables

Sun, 2017/02/12 - 1:21pm | Your editor

Today as usual I posted my tables showing how well we have been doing--which is quite well in our stocks, bonds, and traded funds. Our closed positions are not as lovely because I was taking losses last year on the assumption that a US tax reform measure from the new Administration would make losses less valuable in the future.

Everyone can see the closed-positions table on our website, www.global-investing.com. Use the printer-friendly button to view spreadsheets on your screen.

Today's chore was rendered more difficult by the decision of Barron's to leave out net asset value calculations on US closed-end bond funds invested outside the USA, the very ones we dote upon. Since the weekly's reporters frequently discuss the bargain prices of CEF against their NAV, this switcheroo cost me time and aggravation, as I had to use the more cumbersome Closed-End Fund Association site to do my tables.

Of course CEFs once they are operating do not advertise in Barron's, whereas the operators of exchange-traded and open-end fund do adevertise. However many fund management groups in fact operate in different market vehicles. So the weekly is being penny wise and dollar foolish in how it serves its subscribers.

More for paid subscribers follows.

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NAFTA and Currencies

Fri, 2017/02/10 - 1:48pm | Your editor

While I have many grievances with the new Administration I want to applaud a couple of smart moves. First of all, to get to talk to Xi Zinping, Pres. Trump agreed to recognize the decades-old “one China policy” which labels Taiwan as a breakaway part of China rather than an independent country. After his intermediaries with Beijing (Ivanka Trump and his grandchild, who attended a Chinese New Year party and then talked to Xi's advisers on behalf of the president), the important phone call could take place.

He appears to have walked back from his extreme support of West Bank settlers and to be preparing the ground for a new round of peace talks between Israel and some of its secret supporters among Arab countries, including Saudi Arabia and Egypt. The Middle East thicket is not susceptible to one-liners on Twitter and the new Secretaries of Defense and State have now reined in their boss.

I expect the Two Secretaries will also take in hand the dangerous love-feast between Trump and Putin. While a restart with Russia obviously makes sense (it was attempted by both of the previous US Presidents), it requires expertise which Pres. Trump lacks, despite his having had two wives who speak Russian (Ivana and Melania, both of whom learned Slavic languages as children which gave them a head start when they had to study Russian later.)

Our relationship with English-speaking foreign countries is now marginally less fraught as official talks with Canada and Mexico are taking place at a sherpa level to prepare a summit.

More significantly still, in order to get US infrastructure up to scratch, the Administration is working to create laws to public-private cooperation which build on the venerable tax-free bond issuance for needed finance with more modern variations.

And our rickety tax system will be reformed, which should help investment even if it doesn't do much for Trump voters.

I am a supporter of the fiduciary rule for retirement accounts, to make sure advisers put their customers ahead of the placements which pay off the most for the advisers. But this is an issue in all financial advising, and the 180-day delay may lead to a more general fiduciary rule by the SEC.

There are stock market implications which result from these few smart moves by the new Administration, discussed below. Today's market is mainly reacting to currencies where there are winners and losers.

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