The 2018 Income Picks

Tue, 2017/12/26 - 8:01am | Your editor

My former favorite FAANG stock (the one I use the most) is Apple, and it is looking rather weak at the wending of the year. Its deliberate move to slow down older models is clearly unfair to its customers. And its new phone, the Apple X which costs a few cents under $1000 (before tax) is having issues both on supply and demand—supply because the phone is being produced too slowly in Asia and demand because the high price-tag makes buyers hyper-cautious.

I liked AAPL mainly because it had the largest offshore cash cache which can be repatriated to the US for investments or dividends under the Republican tax reform package. But before the money sails across the Atlantic, the European Union is requiring that Ireland and other havens get some more loot than they had been taxing Apple for earlier.

The impact on other FAANG shares is hard to call but I suspect that in the last week of the year people will start taking their profits on Apple stock which earlier looked like something to hold on to. If you have tax losses they will theoretically be worth less in future years because of the new tax code rates, so you may as well book your gains in 2017. Tax-loss carry-forwards are among the middle class tax breaks perhaps biting the dust now. However the way it will work depends on how the IRS writes the new rules, which may change matters.

My husband early in 2017 talked about buying a few bitcoins, in the presence of me, his sophisticated investor wife, and our son, the Chartered Financial Analyst (under the 3-year CFA system.) We advised him very strongly not to even think about buying a crypto currency and at our last family gathering early in Dec. for the bar-mitzvah of his second child we apologized deeply to him for having kept him out of a stellar investment.

Since that time the bitcoin has risen and then fallen rather sharply as holders decided it was a high-risk volatile investment. It had been that from the start and at several stages in between, but this time the losses were bigger in dollar terms even if they were parallelled earlier in percentage ones. On Christmas Day in open Asian markets, the crypto currency fell another 25%. The sellers were probably Israeli, Korean, and Japanese. Today in the very same markets, bitcoin gained back 10%.

At this stage we are avoiding cryptos leaving them to punters like the Turkish newsagent we go to for our daily papers here in London. On Boxing Day (today, the day when Britons put their presents into boxes to regift them later) I did not see him at all. However, the local fox, which I call Blondie because its fur is lighter than usual, is still on the town here at Mudchute Manor.

More follows for paid subscribers from markets functioning today like Canada, Britain, China, Chile, Mexico, Panama, Israel, Switzerland, the Dutch Antilles, Germany, and Japan.

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The Market Before Christmas

Fri, 2017/12/22 - 11:09am | Your editor

We went to the theater last night, but not to the London opening of Hamilton which was outside my price bracket. We just hopped across the Thames to Greenwich to see the pantomime Cinderella. Its performers were equally multi-racial, as is now common in London. It was surprisingly localized, with “Ella” and her two wicked stepsisters (both played by males) the daughters of Halley, the man who discovered the comet. The only problem I had with the play was that Prince Charming was a bit of a wimp lacking princeliness or sex appeal. Alas, the play had been written before Prince Harry got engaged to Meagan.

A few scandals besides the one we reported on in Mexico yesterday.

As we now all know, Apple throttled older iPhones allegedly to stop batteries from dying, and just by chance also encouraging its i7 and earlier model customers to buy newer phones. As an owner of two i6+ models I am a member of the class suing AAPL.

Despite the Republican attempt to defund Obamacare by removing the obligation to buy health insurance if you want to risk paying out of pocket, in fact Americans are signing up. Drug and hospital shares should gain from news that in week 7 of the open enrollment for Obamacare in the Federally Facilitated Marketplace, covering 39 states, the level has already hit 11.8 mn people.

This is ahead of the S&P target for the whole of 2018. Enrollment can rise further because plans have extended signup times because call centers crashed because of the heavy sales volume and because areas which had natural disasters like Texas, Florida, Georgia, and South Carolina also have extended sign-up periods.

Catalans voted for separatists but barely, which hurt the Spanish bolsa as it means that an early resolution is unlikely. The euro fell 0.5% to $1.1817 overnight.

Bitcoin fell below $12,504 yesterday and opened up only a bit at $13,659.85 Friday, in what I hope was an unrelated move. I did not check with the Turkish-Cypriot newsagent this morning because his son had begun his school holiday and was manning the cash register.

Bloomberg headlined how the former Long Island Iced Tea Wednesday changed its name to Long Blockchain which boosted its share price 183% in yesterday's trading when 15 mn shares changed hands. It has no non-tea assets or blockchain deals yet. It also cancelled a stock sale planned earlier. It is 13% controlled by Briton Eric J. Watson of Cullen Invesrtments who owns businesses, he says, in various English-speaking counties, and which sold its Cullen Agricultural Holdings to the former tea company in 2015.

There will be no blog Mon., a public holiday in most of the world, although the Orthodox and Uniate churches celebrate Christmas in Jan. Instead I will work on the fixed-income part of my outlook for 2018, the equity bit of which came out yesterday. The main problem is that something like 85% of asset managers think bonds are overvalued, a level that has prevailed since Oct., well before the latest Fed interest rate hike. (Data from BofA-Merrill Lynch Global Fund Manager survey.)

One of the few bright bond markets, which had attracted some 43% of asset managers in Nov., was China. Its risks are now scaring them and as of Dec. 15, only 34% of them were buying Chinese debt. About 15% of respondents now expect a Chinese debt crisis to hit in 2018.

Chinese debt valuation would be hit if growth slows, particularly in the hot real estate market, and if inputs and raw materials go up in price because of anti-pollution measures. You have to decide if the Xi Jinping government controls Chinese economic levers or not, which is unpredictable. My challenge for the holiday weekend.

 

The last trading day before Christmas-to-New Year week, when markets tend to be quiet, is mainly about closing deals before 2018 and Catalonia. Not today.

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Our 2018 Forecasts

Thu, 2017/12/21 - 9:04am | Your editor

The pace of debt accumulation and faster inflation will cause the People's Bank of China (the Chinese central bank), to act more aggressively, tempering economic growth in 2018.

And if we are to believe The Economist Intelligence Unit, the same thing will trigger more interest rate rises by the US CB, the Federal Reserve.

Meanwhile Britain is again scaring off investors. It is the world's least loved market (even for its own citizens.) Fund managers told BofA Merrill Lynch that they are reluctant to investing in the UK.l Yet Forbes magazine, while now a bare relic of its past glory, has just called Britain the best country in the world for doing business, beating 152 other countries. Its shares gained a respectable 10%R or so in 2017 but not as much as the US and European rival bourses.

Next year is the key one for the terms of Brexit (British exit from the European Community) and anyone's guess is unlikely to come true given the pressures on the minority May government. There are risks of collapse in the City of London (the financial center) and business overall. But so far these same risks, which have existed since the polling in June 2016, have not derailed the UK economy. So no forecasts here.

Having dumped UK stocks over the Brexit vote and the low poll for the Conservatives, the newest reason for exiting Brexit market Britain is the prediction by lefty Labour Party leader Jeremy Corbyn that there will be another election in 2018 and he will win. That will end the UK push for lower taxes and regulations, which has boosted the London stock exchange. The International Monetary Fund (IMF) lowered its 2018 British growth forecast to 1.5%, warning of pressure on public finances, austerity, and tax rises if the negotiations to exit the EU go wrong.

My favorite foreign market, Canada, also faces uncertainties, what with oil prices, renegotiating Nafta, and its own tax reform. I am worried but not taking profits yet. And some sectors like banking and consumer durables are more attractive north of 64'40 than south of it.

How about The Economist's “country of the year for 2018”, Emmanuel Macron's France? It reminds me of the famous remark by Chou En-Lai on what he thought of the French Revolution: “it's too early to tell.” This is particularly important because the magazine's “country of the year for 2017” was Myanmar, chosen before the persecution of the Rohingya, a year ago, but still a wild card choice. The French juvenile in office is still working to defang its powerful unions on the left and the populist forces on the right. Internationally he must work with whatever new combination of parties Germany comes up with after his buddy Angela Merkel lost control. Brexit is one threat; another is the impact of tightening on France's left leaning state-dominated economy.

Despite the politics and uncertainties, however, the UK stock market like that of France, the USA, Canada, Japan, Australia, Hungary, New Zealand, Argentina, Germany, S&P Latin America, and Shanghai are near their 2017 highs as I write. The S&P 500 is trading at 22.5 times earnings now. China where change is coming for sure trades at only 13.5 times earnings.

 

Bah, Humbug! And what does this portend for 2018?

Chances are that while central banks across the world next year will be tightening rather than ultra- accomodating, but moving slowly and cautioursly. Unless a real risk of wage hikes and inflation rears its head. That would produce another taper tantrum. But the consensus is that interest rates on the 10-year US Treasury bond will be near 2.5% toward the end of 2018, which won't hurt the US GNP.

If the global locomotives, the USA and China, slow too much next year, the odds are sales and earnings won't keep up with inflation, a risk confronting the two leading global markets. While Trump and Xi both like consumption, prosperity, growth, and jobs, jobs, jobs, they also must keep their economy on a sensible course.

The Organisation for International Cooperation and Development (OECD), the rich couniries' club, presicts that inflation will halt at 2.1% in 2018. I hope they are right. Meanwhile the IMF forecasts that growth will be 3.7% worldwide, up 0.6% from this year. However the USA growth rate will be a modest 2.5% in 2018 according to the IMF and Bloomberg economists.

We are not mere buyers of dividend stocks, but clearly a nice payout ratio appeals to shareholders. The most vulnerable sector for this is consumer durables, trading at a high-looking price-earnings ratio. But where a reversal of quantitative easing moves is a risk, it will be carefully done. However the inequities of US tax reform will deliver less of boost to consumption and growth than a more egalitarian tax cut. Poor people spend money they get faster than the idle rich.

I am still pondering what to buy for yield apart from bonds and telcos. Any reader with a hot idea is welcome to share it with this puzzled investor.l

Also vulnerable to a correction are other sectors where growth can be nipped, ranging from autos to banks which have done very well during recent periods of very low interest rates. While the regulatory overkill put into place after the global financial crisis is being eased somewhat, banks are being required to raise their capitalization just as money is becoming dearer. As a result, their shares will be less lucrative for investors. Customer protection is being reduced in the USA but not in other developed countries where red tape is increasing.

The end of quantitative easing means bond investors face a capital loss. Fixed income is a tough one to write about for 2018.

The dramatic rise of the so-called FAANG shares—Facebook, Apple, Amazon, Netscape, and Google (now Alphabet)—is unlikely to repeat at the same pace for another year. It is important to mention the new name of Google because it is the second most profitable of the group companies. The leader is Apple which next year may become the world's first trillion dollar company on current trends.

Chinese counterparts, the BATS—Baidu, Alibaba, Tencent—are less vulnerable (because their p/e ratios are lower) but BATS too won't grow to the sky. They are all functioning on government tolerance, notable TCEHY which is in the business of luring in Chinese youngsters (mostly boys) with video gaming, not exactly a good thing from the viewpoint of Beijing. So Tencent profits may diminish with its more socially acceptable role in retailing, already coming into play in late 2017. We are watching. Not selling yet, but trigger-happy. I want to be rewarded for playing China.

Outside the gaming world, we remain focused on the rise of Asian modernity in areas like insurance. China will grow its economy next year (or soon thereafter) to overtake the EU, at $12 trillion. We expect renewed growth in India and are nibbling at the country, so far mostly with funds. This may change if we get good ideas.

I have hopes of building up our current zero presence in Australia and New Zealand, which offer English language stock analysis (if wilder than our own.) We had a bad experience with drug firm Benitec Down Under and now only have its long-shot warrants. As a matter of exactitude I don't think that Orocobre counts as an Oz stock. I retained my personal stake in a power company and am thinking about raw materials, but I am not yet ready to publish on this. Wait for next year for Crocodile Dundee!

Saudi is surely going to flog Aramco in 2018 but which market gets the deal is unclear. I have mixed feelings about Mohammed bin Salman, now the heir apparent. His nicehess to movie theaters and woman drivers, and his crackdown on corruption threaten to rile the theocracy. Yet some of his own spending is un-Islamic and dangerous to his position.

As Russia goes to the polls on April Fool's Day in 2018, there is little doubt that the victor will be good old Vladimir Vladimirovich Putin, who will thereby become the longest ruler over Russia (to 2024) since Joseph Stalin. He will continue interfering in elections around the globe, but I expect that a deal with Trump will come next year. In 2017 the dirt on Russian fake news and other mischief has kept the Presidents from doing what they both wanted before they were elected. Next year memories will be shorter and they will figure out how to get together.

The history of the past century shows that whenever inflation takes off, a debt crisis results. Banks and financial stocks are vulnerable, but bitcoins most of all.A company which changed its name to Riot Blockchain in October has risen 730% since then according to Ben Levinson, writing in Barron's Dec.18. An estimated quarter of early Bitcoin buyers lost their private keys and can't retrieve their bitcoins.

I worry that the local Turkish Cypriot shopkeeper who sells me my daily newspapers is a bitcoin investor who expects to get over £100,000 when he finally sells his crypto-currency, which he says cost him £300 per. It is like the pre-1929 stock market frenzy which caught fire when the guys shining shoes joined the rush to buy shares—about when the smart money, like Joe Kennedy, sold out. If it happens soon enough in 2018 the global economy will just shrug it off. The longer bitcoin runs for, the greater the systemic threat to the world economy. So I hope it crashes soon. A rival cryptocurrency founder, litecoin, sold out after making 75 times his investment, Charlie Lee, the Joe Kennedy of 2017.

The end of bitcoin will boost a favorite alternative investment of mine, gold. It has already begun a surprising comeback (it always surprises) rising after the Trump tax deal chopped a bit off the dollar's exchange rate. Gold moves inversely to the Greenback, in which it is priced.

The normal gains from housing as an investment will be nipped by the new US tax code, particularly in blue states on the US coasts. So too will the value of previous losses which will offset smaller future gains than before the Tax Reform Bill of 2017. Pharma stocks are particularly vulnerable here. In addition the favorites of cautious investors, utilities, if they are regulated, must ccede to customers the money saved from lowered corporate taxes. (Unregulated utes get to keep it for their shareholders.)

Autos, particularly the fluffy self-drive electric motor bits, are also high risk. As a general rule, I suggest that you avoid “fashion and fad” stocks which nearly always come a cropper.

The family car is vulnerable to a go when needed option. On visiting the shopping mall at Canary Wharf I spotted a few Tesla cars on display. I suspect they are not real because they only place they could drive to is the Dockland Light Railway tracks. It is just that the new London financial center is trendy. And there is not much appeal in visiting parking garages to test-drive a Tesla. Car parks are out along with retailing! Diesel motors for cars (if not trucks) are dead.

Shopping moving on-line means problems for retailers with masses of space to fill.Some are hosting start-ups or specialized boutiques or dining options. Or Tesla dealers! The trend away from department stores is obvious. However a pure bear fund like the new Proshares EMTY Exchange Traded Fund for shorting classic store stocks sounds terrifying too. Nostalgia can make a come-back. Note the course of Microsoft and Blackberry and the surprise UK best-seller, record players and radios looking like the ones of my pre-transistor childhood.

A future growth sector may be telecoms, another favorite of yield-seekers, where the rise of 5G and other amazing technology will require people and telephone companies to upgrade equipment. US telcos won a tax deduction to be taken upfront for upgrading networks, which is also good for suppliers like Nokia, my favorite nostalgia stock in this sector. Unlike bitcoins or self-driving vehicles, this is not a fantasy sector to dream about. The whole world runs on smart cellphones already. Just about the only financial products where huge growth is visible are payments systems, savings, and insurance products which are sold to cellphone users in emerging markets. However questions about access to bandwidth and net neutrality show the degree to which the whole communications complex is still heavily regulated. So it is not a slam dunk either.

By country I think the US under the fickle Donald Trump and without any slack in its labor supply is clearly vulnerable to price rise risks. I'm not sure our happly prosperity can survive this Administration. China is in a similar boat but is a less open economy with fewer levers of control. It is much harder to call and thrre is a risk of capital flight, why the PBOC has to copy US rate hikes.

Britain, Israel, Hungary, Poland, Russia,Ukraine, Slovakia, Austria, Germany have so far escaped without injury from their mistaken political choices in the past few years. Their impossibly populist or nasty nationalist movements create irreconcilable splits in the mainstream political arena. But half these countries now face an election which means trouble.

Other countries are also at risk of left and right extremism or corruption or both: Mexico, India, South Africa, Egypt, The Philippines, Brazil, Spain, Greece, Turkey, Austria, Myanmar, Thailand, Cambodia, Pakistan, Vietnam, Bangladesh. One way to deal with political risks is to ignore them when picking stocks. This is logical, because only a small percentage of the political risks we spot coming in fact do hurt the economy and the stock markets of affected countries.

Another maxim is to find good companies in bad neighborhoods, which can prosper despite the political upheaval in store. As news-hen I am often too influenced by the headlines when prospecting markets. If stable politics were the only criterion, we would wind up invested only in Canada, the Scandinavian countries, Switzerland, France, Japan, and a few Latin American countries which look safe in the short term because they already have had key elections.

Ultimately what will make money in 2018 is what we have been doing for years, searching the world for little-known stocks with which to beat the averages. Our taste is for smaller accessible uncontrolled non-family non-state sector foreign companies too obscure for the herd of index-hugging funds which focus on large caps. We do not buy indexes. We buy companies.

 

More for paid subscribers from today's scant news follows on drug firms and Latin America, mostly but not only.

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O Tidings of Comfort and Joy

Wed, 2017/12/20 - 8:08am | Your editor

Today is the last day of Chanukah and autumn, and it certainly is damp and dark in London where there are again no airplanes flying because of the freezing fog problem. What I thought was a rainbow visible in the sky as we left Gatwick Monday turns out to have been a fogbow—result of freezing mists—which reduce visibility for pilots so much they cannot land. The thing was a harbinger of disaster not of glad tidings. I got it wrong.

A bunch of amateur Islamic terrorists in the north of England have been rounded up by the cops before they could murder anyone for Christmas.

The big news here is that U.K.Toys R Us failed to meet Pension Protection Fund rules requiring a payment of £9 mn to secure employee retirements. So the British chain will be forced to close without its planned restructuring and will have to file for bankruptcy. And its employees will be jobless.

Our London TV is out and Sky cannot come to fix it before we will have returned to the US so they are paying for us to hire a local repairman. A human being! Meanwhile Prime Minister Theresa May included Sky plc as awarding its bosses with “fatcat pay” representing “the unacceptable face of capitalism”, in her words. That's Rupert Murdoch and his minions, in case you were wondering.

 

Politics remains depressingly nasty despite the season. The U.S. Senate says the House of Representatives voted out the tax bill without certain required clauses which means that the law has to go back for another Lower House revision and vote after it passes the Upper House.

And Jeremy Corbyn, the leftie leader of the British Labour Party predicts there will be another election here in the next 12 months—and he will win the Prime Ministership. He also seemed to say that Brexit will not be an issue in the coming poll. He represents “the unacceptable face of socialism” and I am hard pressed to decide whether May or Corbyn is worse.The news amounts to telling us that the grinch stole Christmas.

Another Japanese specs scandal reveals that Mitsubishi Materials Corp sold rubber seals to nuclear power stations and 300 other customers which did not meet safety standards. However Kansai Electric Power Co says there is no immediate risk.

*Bitcoin fell 15% today in Asian trading. Our local Turkish newsvendor and grocer here in East London, the only person I know who owns the crypto-currency, says he is not selling at $16,626 today. He expects his bitcoins to reach 6 figures (in sterling).

North Korea reportedly is adding anthrax germs to its inter-continentital missiles. How jolly.

More for paid subscribers follows from Mexico, Israel, France, the Dutch Antilles, Bermuda, Colombia, Panama, Norway, South Africa, Germany, Italy, Ireland, Egypt, Spain, and Britain, as the news increasingly focuses on mistletoe and holly.

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Freezing Fog Over Channel, Continent Isolated

Tue, 2017/12/19 - 10:47am | Your editor

On our ride in from Gatwick where we landed from delayed JFK yesterday I spotted a rainbow off to the south of a bank of clouds. I assumed it was a herald of tidings of joy but it seems to have indicated that weird weather was coming. We escaped to London just in time, arriving about 24 hours before this blog goes out.

Now all four London airports are out of service, hit with freezing fog which has delayed both incoming and outgoing flights, 49 each at Heathrow, and dozens of others unable to take off as far north as Manchester. White Christmas is all very well if you are travelling by sleigh and need snow under your runner blades, but airplanes actually work better with dry ice-free runways.

 

Humphrey Bogart'sand Michael Jackson's hatmaker Borsalino has gone bankrupt. Hats are so-o-o 20th century but backward baseball caps do not keep the cold off your ears. The Italian firm was over 160 years old.

 

Andrew Left, a short seller at Citron Research, says he has found a way to gain from “the incredibly naive investor base” in crypto-currency. He will sell short the listed Bitcoin Investment Trust and cover his risk by buying bitcoin bitcoin futures. The BIT is trading at double the level of bitcoin it holds. The cryptocurrency was trading at $18,066.40—swell under its Sunday all-time peak of $19,694-- in a low-volume hyped up market. The Citron move is an alternative to trading futures, which are in short supply on the Chicago Mercantile Exchange (CME). I am not a short-seller because the risks are similar to picking up pennies on a railroad track while an express train is coming. But if you want to gain from a market dump of bitcoins, Left is right.

 

Today we have gains from another election to come and one which produced a happy outcome. The world gains from democracy which boosts stock markets if the people or the parties produce a result stock punters approve of. This occurred in Chile on Sunday, with the right wing Sebastian Piñera victory; in South Africa yesterday when the ANC voted out the corrupt Clan Zuma; and our luck may also hold in Thailand next year when the junta is supposed to gain a popular mandate.

With the Republicans about to sell out their electoral base with the supposed tax reform whose main beneficiaries are the idle rich rather than the working or jobless poor, you need to look at other countries to learn to believe in democracy. Our House of Representatives has begun the rollcall on the tax (haha) reform package.

 

More from these countries today as well as a few othern democracies, like France or Israel, where populist protectionism also is a threat to business. Mostly as the wending of the year comes close, we write about deals in Britain, The Netherlands, Canada, Brazil, Mozambique (a first!). Ireland, Mexico, Canada, Spain, South Africa, and Panama.

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Oops

Mon, 2017/12/18 - 3:04pm | Your editor

 Greetings from London to subscribers, presubscribers, and comps. London is from which I sent out a newsletter from our www.global-investing.com website. It did not got out. Please visit the site and read what you are allowed to see. UK google doesn't like the format in openoffice and will not let me post it. I tried libreoffice which is the French version but it did not work either. Our website is registered with google.

thanks for being understanding about the way the internet is being compartmentalized into separate feuding tribes.

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Last Blog for 2017 from New York City

Fri, 2017/12/15 - 3:08pm | Your editor

Today's is the last blog before we head for London for a holiday, during which I will be filing less compulsively than I do when in New York. We are going for family reunions and a lot of family business affecting not me, but my husband, who is British.

My last US posting is rather upbeat despite the Fed raising rates this week, because even in Republican ranks there are now problems with the so-called “tax reform” package being rushed through Congress. I hope that some of the nasties in store for New Yorkers, who except for Pres. Trump personally are assumed to be his opponents, will be dropped. We and people from other coastal states like Massachusetts, Connecticut, New Jersey, and California pay high state and local taxes which since the Federal Income Tax began, before World War I, have been deductible from what we pay Uncle Sam. We also pay high prices for our homes and are in the habit of deducting mortage interest from our taxes. Both of these affect our homes's resale, the most widely available source of family wealth for the US middle class.

As a matter of good governance, I agree that taking away the child tax credit from poor Americans is an abomination. But I also want the tax code to look after grandparents like me.

More for paid subscribers follows from Israel, unusual for a Friday when Tel Aviv is closed. Plus news from Brazil, Belgium, Mexico, Switzerland, Denmark, Japan, the Netherlands and its Antilles, Sweden, Canada, Britain, Chile, Hong Kong, Indonesia, and Finland.

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Topping Germany

Thu, 2017/12/14 - 3:05pm | Your editor

For the first time this week the blog is late not because of technical issues, but because of a conference call by the CEO of one of our key stock holdings.

Before hitting the micro-economics button, I wanted to briefly comment on the inflationary outlook—or rather its lack. Despite the Fed having raised interest rates yesterday, as had long been expected, and despite its warning that there will be 3 more cuts next year, the US central bank did not justify these hikes by blaming inflation risks, as is customary in the CB business.

On the contrary, the Fed singularly failed to mention inflationary risks from the Big Kahuna now being prepared by Congess and the White House, called “tax reform” but in fact a major move to boost the US government deficit because there is no plan to replace the loss of tax revenues. Deficit spending no longer seems to require that the Fed take away the punchbowl just as the party gets going, to quote former a Fed chairman,William McChesney Martin.

It also leaves the US vulnerable on many fronts to inflationary pressures which so far are hidden, like higher wage demands as unemployment falls to extremely low levels historically. But these are not really mentioned except as an exception: lower unemployment is not causing wage demands to rise. The US consumer price index is not operating as it has done historically—which is why the Fed is also operating in uncharted fields.

To quote the BofA Merrill Lynch macro team, “the Phillips curve is dead” because the Fed is not tightening to react to inflation. In my youth, the Fed always boosted interest rates because of fear of inflation. Now the US core CPI is up all of 0.1%--big whoop—but the Fed is proceeding with 0.25% interest rate increases, yesterday, and 3 more times next year, according to its statement. So nobody understands what is happening at the Fed.

 

The new Zugspitze cable car will go higher than the old one. As a result, it will be even easier for me to get to be Uber Alles in Germany. It is the highest point in the country, south of Munich. All my ancestors were German and forced to flee or be killed because they were also Jewish, one reason I want to be at the German top peak, much higher than Hitler's eyrie at Berchtesgaden.

 

More for paid subscribers follows from Israel, Mexico, Spain, Poland, Russia, Britain, Denmark, Australia, Norway, the Dutch Antilles, Argentina, Germany, Britain, Ireland, Hong Kong, Canada, China, South Africa, Japan, and Switzerland.

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Capitol Hill Reacts to Moore Defeat

Wed, 2017/12/13 - 1:29pm | Your editor

It was a close call but even Alabamans are ethical and intelligent enough to be trusted with a Senate vote. The defeat of Judge Moore is, of course, being viewed as a judgment on the Trump presidency, but in fact he was such a singularly poor candidate to have been chosen that his defeat may reflect only on his own beliefs, behavior, and electoral appeal. Making sexual passes at underage girls is not mere harassment. It is a crime.

I think the Republicans are worried that they will not have another crack at "tax reform" and have lowered some of the giveaways to get the thing to Pres. Trump by Christmas. If they lose enough seats in the 2018 election they will have to resume normal behavior on Capitol Hill and work across the aisle with Democrats.

The Internet and telephone crisis at my office is not resolved but I am working on my old desktop computer to get the blog out on a more timely basis. I apologize for the chaos of the past few days, caused not only by my own great lack of tech savvy, but also by that of the people supposedly providing telephone, internet, and computer services. My telephone line was taken out four times by people from Spectrum trying to reboot my modem, insisting that there was no general fault. Doing so cut off the phone in midstream conversation with the tech support folks. But then I learned that, again, lots of lines were out in my building, which Spectrum began every conversation by insisting was not the case. Each tech call required that I start again to establish my ID and bona fides and then explain the situation, again, to a new techie. This happened four times. I then took the laptop to Microsoft which very graciously offered to wipe out my hard drive and reinstall a new one for the mere sum of $119 plus tax, losing me all my account information—for subscribers, my business, my IRS prep, and our stock performance tables. So I schlepped the computer back to Carlos at Staples who had set it up in the first place. Now I await a reestablishment of my link from Spectrum, which offered to do it tomorrow but which I shamed into coming today. And hearing from Carlos what the solution will involve. Once you get to a real human being the 21st century is tolerable, but until then....argh.

 

We have news today from Chile to Germany, from Switzerland to Mauretania, from Brazil to China, from Argentina to Belgium.

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Another Crisis in Technolgoy

Tue, 2017/12/12 - 3:50pm | Your editor

 

Tuesday's blog is delayed because my internet and telephone went out in my office. I got a temporary link only after 4 calls to try to get Time-Warner, now Spectrum, to reestablish my lines. Each time they worked on the internet link the telephone went down while they jiggled the modem settings. They are the tech support folks. Me I am just the customer but they didn't seem to know this would happen..

 

*Your editor kvelled yesterday about a small company stock she recommended that rose to nearly double in price after a bid came from a US firm for the whole shebang. We had another one overnight on a stock recommended by our reporter Harry Geisel, MBA, called Gemalto. Harry is chuffed that a takeover by Atoa will take place at $26.61, and that the stock rose 12% yesterday to mover toward the offer. He was not particularly kind to your editor who had sold GTOMY, a Franco-Dutch maker of security devices like smart cards and ID, in Nov. 2016, as part of an end-of-year cull. Harry is going to get $26.61 but we sold 13 months ago for a dollar less than he will get next year, $25.60.

Which is not to say buy-and-hold is not generally a good tactic, or that Harry is a bad stock picker. We had a gain that satisfied me then, and I wanted to buy something else. We cannon own every American Depositary Receipt stock out there.

Nor can I keep up with more stocks than I do now. Especially when tech goes agly.

 

More today from my pre-workday internet research at home. This news is all stale. You have been warned. We have news from Ireland via Atlanta, Australia, Switzerland, Sweden, Belgium, Hong Kong, Canada, South Africa, Mexico, Colombia, Brazil, Chile, Israel, and Britain.

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