Artificial Intelligence and Stocks

Tue, 2017/08/01 - 12:05pm | Your editor

JP Morgan, the bank where my company has its account, today revealed it has developed a robot which can carry out global equity trades on behalf of its client quickly and at the best price, using artificial intelligence.

According to the Financial Times, the system, called LOXM, was first used in the bank's European equities algorithms business in Q1, and will next be launched in Asian markets.

LOXM will hit the US in Q4, according to Daniel Ciment, JPM head of global equities electronics trading. LOXM builds its prowess by using lessons it has learned from billions of past trades, both real and simulated, and knows how to best sell of large stakes in listed companies without causing prices to move against it. Mr Ciment told the pink newspaper that in European trials so far LOXM got “significantly better” pricing than human beings. Moreover LOXM is cheaper nad more focused than humans who are easily bored by the details of finding the best execution.

LOXM however does not have the ability to make trading decisions on its own. It still needs human beings (or maybe human bagels) to tell it to buy or sell.

The eventual goal is to teach LOXM to learn the way individual clients react before it begins trading on their behalf, but the bank points out that customers will have the option of agreeing to this evolution on their behalf—or not.

 

More today from the world of human stock trading with two companies reporting and lots of tidbits of news from around the world, from London to Tel Aviv, from Hong Kong to Helsinki, from Toronto to São Paulo. We start of with a robot-written quarterly and then fill in the gaps...

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Alternative Investments

Mon, 2017/07/31 - 2:42pm | Your editor

Today we present a major report to our paid subscribers about how to invest in global bonds and alternative sectors like global infrastructure and real estate. My interest was piqued because Mohammed El-Arian, the former CEO of Pimco and the former investment chief of the Harvard Endowment is joining specialist alternative investment shop Investcorp's advisory board. Investcorp helps global fatcats and their fund managers, mostly from the Middle East, invest worldwide. El-Arian, an American, will help CEO Mohammed Alardhi, who is from Oman, find alternative investments suitable for the wealth funds, sheikhs, and royals of the region as well as other high-net individuals.

We can do it too, without the same level of fees and, so far, no man named Mohammed in my team.

 

But before discussing this technical report, here is news about my favorite central bank, that of Switzerland, which is quoted on the Zurich exchange. Every now and then a newsletter writes up the bank and tells its benighted readers to invest in it. But this is not a good tactic, because the Swiss version of the Fed invests to protect the interests of Switzerland, not its own shareholders. In the June quarter, the Eidgenossische Fed lost 6.7 mn francs, about $5.4 mn, because it buys dollars to support Swiss exports of cheese, watches, pharmaceuticals, and other goods. Buying dollars helps keep the franc from rising and hurting business outside the country.

It then rather mindlessly invests these dollars in a home-grown index of US securities, mostly stocks. As we have pointed out already based on reports on instutitional shareholders, the Swiss CB just tries to buy the entire US market, rather than selecting individual shares by any criterion used by analysts. And they often wind up owning non-US stocks (notably Israeli ones, but also ones from Euroland) because they are quoted on the NYSE. So the impact on the franc is being undermined by the CB.

In Q2 despite the official level of Wall Street having risen across the board, the Swiss managed to lose money because they bought the market rather than trying to buy winners, like the US tech stocks.

They also lost because they loaded up on Israel's leading blue chip,

 

So, nein, non, no, you don't want to be a shareholder in the Swissie CB. More about what this means for our own portfolio follows for paid subscribers along with news from Israel to Germany to Pakistan, Hong Kong to Mexico, Spain to Italy, and a couple of reports and one trading alert.

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Sunday Tables Filed

Sun, 2017/07/30 - 2:09pm | Your editor

I just posted the performance tables at www.global-investing.com, with difficulty, as my new brokerage account doesn't display things the same way as my old one did. Paid subscribers should see the normal three tables, covering stocks and bonds; exchange-traded and closed-end funds; and gains and losses.

Pre-subscribers only get to see the last one. Sometimes I get lucky. I sold our Pakistan Fund, PAK, early this year because of changes in my contacts in the country and because my favorite London seller of Pakistani clothing went out of business. I sold because I feared I would not be informed of things on a timely basis but I had no idea that the president had looted the country to buy posh flats in Mayfair and would be removed from office by the country's Supreme Court.

I also got lucky with another stock sold earlier, Imperial Brands, a UK tobacco peddler, because I came to realize that its vape business was very marginal and its profits are generated by selling tobacco cigarettes which kill smoking-addicts.

I try to be an ethical investor as well as an ethical person, which is why I also sold out of my former Alcoa stake when the successor company pretended it had had no role in the mis-selling of cladding to the operators of the council tower blocks (project high-rise buildings) in Chelsea & Westminister, London. They had plastic between the layers of aluminum which caught fire and killed at least 80 tenants. I sold as soon as I got back control of my account when it transferred to Schwab from Fidelity last week. While I am no puritan I do feel that some companies behave so badly that I do not want to own their stocks.

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Time for a Change

Fri, 2017/07/28 - 1:59pm | Your editor

It is time for a change.

I think the USA, the GOP, and the Trump Administration's prospects are better now that repeal of Obama care has been forced off the Congressional agenda. Unlike other key policies Pres Trump supported in his successful campaign for office, like infrastructure spending and tax reform, there never really was a popular mandate for ending the keynote policy of the prior Administration.

Infrastructure investment opening up to private-sector partners is a commonplace in foreign countries and there is no serious reason why it cannot be done here. And anyone who has ever filled out W2 forms knows that US taxes are an unholy mess.

Having said that, I am still wary of the White House tendency to adopt wholesale policies inherited from the anti-Mencken parts of the country: hostility to immigrants, trade protectionism, blocking access to family planning and abortion, and above all discrimination against the many gays and lesbians who have left the closet (and transgender people who I think are rather rare as I have never met one.)

In foreign policy of course Mr Trump is unable to make overtures to Russia to reduce world tensions because his own team was infiltrated by Putin and his spies before it won office. But history shows that this is no tragedy. Every president upon taking office has tried to reset relations since Putin came to power: Bush senior, Clinton, George W. Bush, Obama, and of course Trump. It has never worked because the Russian government is a corrupt murderous oligarchy able to manipulate home country opinion to back irridentism, theft, nationalism, social repression, and overreach.

The US economy in Q2 nearly doubled its growth rate to 2.6% so this is a good time for economic reform measures. It is also a good time to talk turkey to Russia and China as the Hermit Kingdom of North Korea has again tested a big missile.

 

More today from Britain, Denmark, Spain, Bermuda, Canada, Mexico, Brazil, Israel, Nevada, and a few other places. As usual at this time of the quarter we have reports from our companies. Plus a trade for Monday.

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Another Thursday Blog

Thu, 2017/07/27 - 2:49pm | Your editor

Today, I hope, my readers will get two blogs, because the one from Wednesday did not go out normally and had to be re-sent, which I did early this morning. I left the office yesterday before I was sure the e-mail had gone out because of a social engagement. The Wednesday blog is badly formatted but I suspect most of you would rather see it with variable fonts than not see it at all.

 

After my dawn send, I attended to personal business, namely the vexed matter of using a bank transfer to pay the builder we owe money to in Portugal. The rules of SWIFT appear to have been changed in the middle of the month without there being a process for informing bank clients using the electronic transfer system why they did not work. After spending hours trying to pay our builder I went to the bank and was able to override the client-managed process by letting a bank officer do the deed. In between checking the data points he spent most of his time trying to get my husband's account moved over to the bank he works for, which by the way is unlikely precisely because he was pitching so hard.

Then no less than 2 of the 3 elevators in this building were out of service and my old desktop computer which I use as a back up also went agly. Never rely on systems which used to work. They will suddenly fail.

 

From my new brokerage's global expert Jeffrey Kleintop, here is a new reason for investing outside the US: thee degree to which the world's stock markets move in sync with each other has fallen to the lowest level in 20 years. He compared correlation between markets of the G20 countries plus Spain and found that they are no longer aligned with each other. Lower correlation increases the benefit of diversification to cut risks. He adds that this is “especially good news right now because stocks may be due for a pullback.” My new brokerage is Charles Schwab.

 

More for paid subscribers follows from around the globe with another terrible day of multiple company report (including an “ad hoc” one from a German company which didn't even need to provide it) and several scandals.

 

Fiat Luxe. As we are out of Fiat-Chrysler and its Ferrari sub it worth noting that its former labor relations head in Motown tapped into company funds provided for union worker training along with his late counterpart from the United Auto Workers Union to the tune of at least $1.8 mn. Among the items the exec funded with the stolen cash was a Ferrari 458 Spider, not a Fiat 500.

However Fiat is not one of the carmakers charged with running a cartel in Germany. Note also that the chemical producers there are now under investigation by the European Union for collusion in setting the prices for feedstock. Its market dominance was very reason that IG Farben was split three ways after World War II to create BASF, Bayer, and Hoechst.

Now for the rest of the news. There is a lot of it from the Americas, Europe, and the rest of the world.

 

*The scandal which will not go away is how drug company detail men persuaded doctors to liberally prescribe potentially addictive pain-killers on behalf of, among others, Teva Pharma of Israel. Sen. Claire McCaskill (D.-Mo.) who is minority leader of the Homeland Security Committee is investigating the way the drug companies pushed their opioids to boost use without warning often uninformed general practitioners of the risks.

*The value of Astra Zeneca fell by $13 bn on the stock market after its lung cancer drug combo of Imfinzi and Tremelimumab failed ther Mystic trials. It also had a bad quarter. So we now know why Pascal Soriot was hoping to hop to Teva. AZN is one of the holdings of Investor A/B, IVSBF, our Swedish holding co.

*Although its shares fell 2.5% today, I disagree with Mehdi Zare who today in www.seekingalpha.com called Teva “walking dead.”

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Resend of Wednesday

Thu, 2017/07/27 - 6:58am | Your editor

Today my new Schwab account arrived and I am pretty busy checking out the transfers (which you need to do) so there will only be a brief blog and a late one. We also have two big ones reporting and a political decision helping one of our companies to tell about. And also a deal gone wrong, reversing part of a whopping gain yesterday, and another reversal as well. The theme might be easy come, easy go.

There is news from the UK, Mexico, Argentina, the Dutch Antilles, Germany, Switzerland, Canada, Ireland, Brazil, Spain, Japan, India, Australia, and Myanmar.

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Acat At Last

Wed, 2017/07/26 - 1:53pm | Your editor

Today my new Schwab account arrived and I am pretty busy checking out the transfers (which you need to do) so there will only be a brief blog and a late one. We also have two big ones reporting and a political decision helping one of our companies to tell about. And also a deal gone wrong, reversing part of a whopping gain yesterday, and another reversal as well. The theme might be easy come, easy go.

There is news from the UK, Mexico, Argentina, the Dutch Antilles, Germany, Switzerland, Canada, Ireland, Brazil, Spain, Japan, India, Australia, and Myanmar.

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No ACAT But Lots of News

Tue, 2017/07/25 - 12:45pm | Your editor

Day 5 of the ACAT transfer dawned with no brokerage account yet. My stocks are still in transit between Fidelity and Schwab. But here is important news about my new brokerage: Schwab, known for lowering fees to compete with low-costs exchange-traded stock substitutes like iShares or Vanguard funds, has seen ETF assets under its custody platform reach $355 bn in June, up 29% year-over-year from an already high level.

The inflows were $9 bn into international equity ETFs and only $6.5 bn into US equity ETFs. So the California based brokerage does attract global investing fans.

 

More for paid subscribers from Germany, Portugal, Brazil, Britain, Spain, Ireland, Switzerland, Panama, and Chile.

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IMF Outlook

Mon, 2017/07/24 - 12:19pm | Your editor

The International Monetary Fund produced its 2nd half updated forecasts today. The US economy is now predicted to grow 1.7% rather than 2%. Household well-being has deteriorated the most in three years. The IMF also cut its forecast for Britain, now expected also to log in a 1.7% output rise, down from 2% predicted in its April forecast, the first downgrade since the EU referendum late year. After the vote in June 2016, the Fund had to raise its British forecasts to 1.1% for this year (in Oct.) to 1.5% (in Jan.) and 2% (in April).

 

The Fund's downgrade of the US outlook results from lower expectations for tax reform and infrastructure funding measures from the beleaguered Trump Administration. The IMF, which operates from K Street, in Washington, D.C., always has its forecasts vetted by the countries themselves which means that they tend to be better than the final outcome turns out to be.

 

My account is now mostly closed at Fidelity but it has not yet landed at Schwab, despite promises from the former. So today's blog is incomplete. But we have news from the US, Mexico, Britain, Israel, Germany, Panama, India, Sweden, Denmark, Japan, and Brazil.

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What A Day!

Fri, 2017/07/21 - 1:01pm | Your editor

Today is the Friday from Hell, with the temperature and humidity in the mid-90s and 8 company reports hitting before today.

Moreover my desktop computer has been infected with a virus called “accelerate” which pretends to be seeking out viruses while really being one itself. I have no idea how I got infected, but of course will not call the toll-free number that it displays to get “help”.

Meanwhile my Avast free antivirus program is displaying “jrog2” which makes me think of the pirate flag, and is offering to protect banking and shopping on a desktop computer if I upgrade. And my wifi is proving intermittent. Moreover jolly roger so far failed to take out PCAccelerate.pro, the virus from 2014, which insists on scanning your computer and demands that you phone (855) 680-4904) to activate your account to stop this. Among its nastier habits is to stop the clock on the computer and keep me from moving to the web

Meanwhile Fidelity, my soon-to-be-ex brokerage, has blocked my access to all US-traded shares and bonds in my account, and is only showing positions held on foreign markets, but not US ones, which is scary with GE reporting today (I own it like any respectable US investor.) Moreover Fido transferred $37,000 from my “core” money market account (cash) to Schwab and is now threatening to bust my two most recent trades because they have not been paid for—because Fido itself transferred the cash.

As I am increasingly learning, the services on the Internet, like search or corporate g-mail are increasingly trying to charge for what used to be free. My mistake. I am just soooo 20th century.

 

More for paid subscribers from Australia, Panama, Mexico, Britain, the Dutch Antilles, Britain, Spain, Switzerland, Argentina, India, Sweden, Mexico, South Africa, Israel, Colombia, and Canada.

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