Talk Markets Update

Wed, 2017/11/15 - 7:35pm | Your editor

Before I head out for the investor day of Fibra Uno, here is a message from Boaz Berkowitz of where my newsletter will be the guinea pig for a new service: subscription fulfillment. This by the techies at talkmarkets led by a Florida chief technology officer born in the country the UN calls FYROM, Macedonia for the rest of us, and a Skopje-based webmistress named Tanja. Our former webmaster Andrew is now working full-time for the university in Newfoundland where he lives, why I agreed to help Talkmarkets move into website management.

Here is Boaz Berkowitz's latest update from central Israel. I helped fund the TalkMarkets startup in my own small way and am making another investment this month. He writes: Read more »

Another Down Day

Wed, 2017/11/15 - 4:28pm | Your editor

Today the Frankfurter Allgemeine Zeitung broke a major US story, that Mohammed El-Erian is being considered for the role of deputy chairman of the US Federal Reserve. The former deputy head of the International Monetary Fund, former co-chief of Pimco, and former chief investment officer of the Harvard Endowment is a Brooklyn-born US citizen of Egyptian heritage who currently serves as chief economist at Allianz SE, Pimco's parent, in Germany, which may explain how FAZ got the news. He would replace Stanley Fischer who announced his resignation. Mr Fisher is an American dual national who used to head the Israeli Central Bank.

Given Pres. Trump's frequent nasty anti-Muslim rants, this nomination would greatly improve his and our country's reputation. We need for fair play and recognizing talent among Muslims both in the Middle East and in middle America. And the Fed under its new lawyer chairman needs a top economist. This article was then confirmed by the Wall Street Journal blog which, however, ran a picture of the NY Fed building, not the one where the head Fed works, in Washington DC.


Meanwhile several notes from BoA-Merrill Lynch Global Research are forecasting for 2018. The Thundering Herd expects Mexican growth to be higher this year than predicted earlier, a 2.1% rise rather than merely 1.9% this year and, because of statistical carry, a slower growth level next year, to only 1.6%, now the consensus level. I think with a lower peso it can go either way.

On Canada the bank expects forex changes weakening the loony next year, to US$1.33 per by Q2 2018 because it expects flat oil prices and no rate increases by the Bank of Canada (central bank) in Dec. or Jan. That would boost the greenback against the C$. Later next year Merrill thinks that drop may reverse. Also Canada is losing direct investment and also will rus a potential trade deficit equal to “ a shocking 8% of its GDP,” from 4.8% now, Merrill writes. The great unknown is what happens over Nafta negotiations.

Meanwhile Merrill's Global Fund Manager survey discovered that just under a quarter of equity investors, 23%, think that corporate balance sheets are over-leveraged, particularly the “frothy FAANG” stocks which are “no longer creating value for shareholders” by borrowing to fund share buy-backs “at current valuation levels”. FAANG (invented by Jim Cramer) stands for Facebook, Amazon, Apple, Netflix, and Google, now Alphabet, but the acronym was too good. They now account for ~15% of US GDP, and at mid-2017 had all risen by 30% in 2017 except Alphabet whose new name confused investors, up only 25%.

Trump-boosters at JP Morgan Chase are now saying that there will be 4 US interest rate hikes in 2018 which worried Wall Street out of its enthusiasm for a tax reform package.


More on Mexico, FAANGs, drug stocks, Islam and reporting companies, plus news from Abu Dhabi and Latvia, both new coverage places for us, and plenty more. Today's blog is heavy because of news and because I will be attending an investment day with one of our Mexican shares tomorrow so the blog then will be late or non-existent. We have a new stock pick today as well.

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The Stock Magic Is Going

Tue, 2017/11/14 - 2:18pm | Your editor

China issued data showing that growth is slowing, which had an impact on raw materials prices. It is also tightening credit to cut risks to its economy.

It turns out that the volume of on-line sales during China's singles day—11/11—this year was up 48% from 2016. It his the equivalent of $38.1 bn, beating all other shopping days in the world, again, like Thanksgiving Friday. The news failed to boost Chinese internet stocks further in US markets.  Money doesn't buy access. A study found that China's netizens have the least access to news and information of web users in the world's major markets.

Venezuela, owing much money to Beijing, is now definitely in default, writes Standard & Poor's.

Apologies to Abhimanyu in India over my failure to buy back  Nintendo of Japan, NTDOY, not in his coverage area. Even apart from the Japanese game group's “Switch” which Abhi found desperately desireable, NTDOY has now revived its Super-Mario of yore for the movies. Comcast's Unversal Pictures will fund an animated Super Mario Bros movie about the plumbers, according to Dow Jones today. I own CMCSA stock but hating to buy back shares we sold in the past, I didn't spring for NTDOY.

And if that were not bad enough I am a big holder of GE. And despite my best effort, TJ Maxx (TJX) is losing sales volumes.

The euro is up to $1.177 so all is not lost in a global portfolio, however.

More for paid subscrsibers from Australia,  Bermuda, Brazil, Britain, Canada, Chile, Cuba, Denmark, Germany,  Hong Kong, India, Ireland, Israel, Italy, Japan, Jordan, Mexico, the Netherlands, Russia, and Spain including company reports and insights from the Paradise Papers about tax avoidance or prudence.

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The Slide Begins

Mon, 2017/11/13 - 3:03pm | Your editor

Adrian Ash, Head of Research at London gold-trading site bullionvault, writes:
One key requirement of money is that it doesn't drop 27% of its value inside 4 days, only to regain half that drop in the next 36 hours. Hyper-volatility signaled the death of the German Reichmark following World War I. (Ed: actually in was the printing press which doesn't mean that huge upward and downward moves don't hurt the appeal of the crypto-currency.)

Bitcoin: Money of the future? asks this neat little video which just won a competition run by the European Central Bank. "Nope," comes the video's answer, [given] Bitcoin's huge volatility to date. While failing to find monetary use outside the trade in illicit stuff on-line (for which they are perfect), they will no doubt play some role in our legal monetary future. Coins began replacing unwritten debts in the 7th Century BC. Paper notes acted as a receipt for gold coin from the Middle Ages. Today's contact-less cards make both coins and paper redundant [for] the vast majority of shoppers.. Whatever the social, economic, and political risks of choosing to abolish cash like this, money is a tool which humanity has constantly changed and re-invented. Indeed, the blockchain technology underpinning today's crypto-currencies...with separate systems all processing and recording each transaction rather than a licensed bank getting in the middle with its fees is showing strong appeal to central banks like the ECB.
BullionVault seeks to help people get out of currency, into gold or silver or platinum, as a secure cost-effective store of value. Liquidity on the way out is paramount, back into cash that's ready for spending or converting into other assets elsewhere as you choose. Building new payment mechanisms, or enabling customers to store value in currencies different from the four funding and trading currencies we offer is not what we do. If you want to sell your gold to buy shares or a new house, BullionVault will enable the first leg of that trade at the very lowest costs. For the second part, you will want to find the best value process for yourself. That's why we don't offer Swiss Francs as a funding or trading currency, despite frequent requests over the years. We don't accept equities, bonds, seashells, cigarettes or 5-ton lumps of stone either.

“The Swiss central bank has worked to destroy the Franc's reputation for stability. Like every other monetary authority, it wants cheap money to juice the economy no matter the cost to wage-earners, savers, and the country's international standing. But Dollars, Euros, Sterling, and Yen are the currencies quoted and dealt by the professional wholesale bullion market. It's the deep liquidity and low costs of that market,free from costly FX transactions,.to which BullionVault seeks to give its users access. Outside the 3 major currencies we've accepted since launching in 2005, only the Japanese Yen has been added, because it has the depth and liquidity we need to ensure low friction and low costs for ourselves and our users. So, while we haven't missed the interest, excitement and innovation building around Bitcoin since its invention in 2009, we still don't believe it currently offers BullionVault any commercial opportunity. BullionVault's ambition [is] to be the best in physical precious metals which makes us the largest provider to private investors anywhere on the internet.

“This latest bubble (and bubble it is) also maps the boom-bust seen at the birth of other revolutionary technologies and tools in history. Think of listed shares and government bond markets (the French Mississippi and then South Sea Bubble 1720), .railways (the British bubble of the 1840s),.investment trusts (Wall Street's bubble and then Great Crash 1929), and of course the internet (the DotCom Bubble and crash of 1996-2003). Which is it for Bitcoin? Tulips or railways? Useless tulips and very useful railways both destroyed herd investors who bought too late into the initial hype and didn't get out before it burst.”


Bullionvault is sponsored by the World Gold Council as is the gold investment vehicle we recommend to our paid subscribers. Our gold play is SPDR Gold, GLD, an ETF sponsored by the mining companies in the WGC. We used to run ads for which failed to get enough readers to sign up. Gold buyers are mostly older men who believe that the government is out to debase the currency, Our advice is to invest internationally rather than to put all your shekels into the barbaric relic, gold. So we lost the ad revenues, which doesn't mean that I don't listen to Adrian.

I recommend that every portfolio include some gold to offset sell-offs in stocks and bonds. IT's happening today  on worries about US tax reform, problems with Brexit, and GE halving its dividend from 4.69% to 2.34% The Brexit news is that Foreign Secy, who doesn't often accept blame, has had to apologize for remarks that put a British prisoner in Turkey at risk. There is a rebellion against the Teresia May team which may further frighten British industry and the government now promises that there will be a second parliamentary vote on any deal it strikes with the EU. The US hit a new high budget deficit in Oct, up 38% y/y to $63 bn, presumably because of disasters. This makes a tax rewrite less likely because it has to keep the deficit from rising more than $1.5 trillion. Sept. actually saw a surplus.

Natch gold is up. And natch the stock market is not.


More for subscribers follows from Argentina, Australia Belgium, Brazil, Britain, Canada, Colombia, Germany, Greece, Hong Kong, Ireland, Israel, Russia, South Africa, Spain, Sweden, and the USA. There is lots of M&A action as the year rolls to a close.

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Sunday Tables Posted

Sun, 2017/11/12 - 1:49pm | Your editor

Today is not as cold as yesterday but it is still too cold to trek to our local Chinese restaurant, so we are having pasta. I have posted the tables at the website. Everyone gets to see our closed positions table--which is now showing some sales for tax reasons--but only current subscribers are allowed to see our current holdings of stocks, bonds, closed-end and exchange-traded funds.

More on methodology follows for paid subscribers: Read more »

Terrible Thursday Fell on Friday

Fri, 2017/11/10 - 4:08pm | Your editor

This is another day with many reports and stock market news. The stock market has become the shock market because investors have discovered that the cuts in corporate taxation they had hoped for will be deferred to 2019 because of handouts to other taxpayers to whom Republican in Congress owe more. Moreover Blue State “middle class” taxpayers, who are more likely to be stock investors according to polls, like those of us along the east and west coast, risk losing their ability to write off state and local income tax and mortgage interest, long-term loopholes, because we are not expected to vote to re-elect Republican senators or members of congress. Also under the gun is the deductability of alimony or benefits to adoptive parents, to allow for an increase in tax breaks for becoming parents even for the super-rich.


All this because without Democrat vots the congress cannot raise the deficit by more than $1.5 trillion over the next 10 years, thanks to a ceiling voted to prevent the former Adminstration from using its majority after Obama's win from cutting taxes. John McCain has called the tax deal “dead on arrival”. Hence Wall St. is in the red.


Enough grousing about the missing link in the current debate, tax reform. Time to hit the road and report on our companies from Switzeralnd, Canada, Germany, Japan, Mexico, Finland, Hong Kong, Israel, Britain, Denmark, Ireland, Singapore, Indonesia, Chile, Colombia, Thailand, Greater China, and Brazil.

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Frau Holle

Thu, 2017/11/09 - 2:55pm | Your editor

It is the beginning of winter in my city so this morning I got out our eiderdowns to stay cozy at night. These I inherited from my German-born mother who did not believe in mere blankets. In German children's stories “Frau Holle” up in the sky creates snow by shaking out her eiderdowns. Unlike many of the tales the Brothers Grimm collected (which were from Huguenots who had brought La Mère Oie, AKA Mother Goose with them when they fled France), this is probably a genuine German children's myth.

Then we had some contretemps over passwords for my future webmistress and another over getting our Portuguese lawyer into our account with the local council over taxes. Portuguese lawyers have e-mail addresses that amount to a password all on their own, with lots of letters and numbers both upper and lower case. Luckily no accents.

Happily my office phone is now activated after over 10 weeks of no linkage. Ain't technology wonderful? Alas I could not get throught to Macedonia (AKA FYROM) where my new webmistress is located before they all knocked off for the day.


US shares are down because what Wall Street wanted, a corporate tax cut, may not survive amidst other giveaways targeted more closely to rich Republican donors.

More news from Britain, Canada, Germany, France, Colombia, Mexico, Japan, Israel, Australia, and Hong Kong-China. Because my broker's site is out of order with the selloff today, my blog is blissfully short for a change.

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Terrible Thursday on Wednesday

Wed, 2017/11/08 - 4:21pm | Your editor

Poor Commerce Secretary Wilbur Ross. Not only is he now in the spotlight for his Navigator offshore entity engaging in shipping services on behalf of a Russian company on the embargo list after the father-in-law of the company head, Vladimir Vladimirovich Putin, was sanctioned for illegally taking control of Yalta from Ukraine, but he is being removed by Forbes' rich list. Today's Financial Times writes that that Ross claimed he was worth over $2 bn but he only claimed $700 mn in net worth to Congress when he was nominated for the cabinet by Pres. Trump.

Forbes, which no longer counts as a serious business magazine, publishing mostly puffery, is a questionable source nowadays. And the missing money is probably in entities revealed by the Paradise Papers which were published by rival news sources to both Forbes and the FT: the Guardian and the BBC. Mr Ross will probably have to be reinsstated in the next rich list.

However the latest news from Canada's Valeant (VRX) and ADP may keep Bill Ackman from rising on the rich list. He famously backed VRX despite a pattern of using acquisitions to increase its metrics and stock price while its basic business floundered under former manager Mike Pearson. Now VRX has sold given back its female Viagra to the firm from which it bought the product, Sprout, a mere 3 years ago after it paid $1 bn for the drug. Apparently it doesn't boost ladies' libido.

Moreover Ackman's proxy fight for ADP board seats was roundly voted down by shareholders. A couple of months ago Ackman's Pershing Square Holdings, which we used to own (as it was a rare vehicle for retail investors to get into a hedge fund via a British-listed entity like a US closed-end-fund) was also voted down over Procter & Gamble board seats. I sold when I realized he was not making money for me and my readers.

Unlike Ross, Ackman is not a self-made rich man as he was born into a wealthy New York real estate family, which owns Ackman-Ziff. Unlike Ross also, Ackman backed Clinton after failing in a move to get NY Mayor Michael Bloomberg the Republican nomination for the 2016 Presidential election. However after Trump won, Mr Ackman said he was “bullish” on Trump's administration.


David Goldman writing in Asia Times notes that Prince Mohammed bin Salman's purge of oligarchs and lots of his cousins in Saudi Arabia is supoorted not only in Washington, Moscow, Beijing, Berlin, London, Paris, and Tokyo, but also by Jerusalem. He quoted from officials or newspapers in each of those capitals. While MbS may not succeed, he seems to be the Man of the Year for 2017 for his combination of anti-corruption and industrialization for Saudi Arabia reducing the power of the clergy and increasing the role of women. All of which is still not to say that the arrest of Prince Walid bin Talal has not shocked the international invesstment community which worked with him—and his daughter.


Time-Warner is being asked by the US DoJ to sell CNN cable channels or DirecTV to complete its merger with AT&T, the first time I think in history that a huge divestiture has been sought for a vertical (as opposed to a horizontal) merger. This reeks of revenge over CNN's view of the Administration.

Thanks to those who asked. Our daughter won election to the Cleveland suburban school board where her kids attend high school.

This week terrible Thursday is falling on a Wednesday and we have a glut of new quarterly results. More for paid subscribers follow from Argentina, Australia, Brazil Britain, Canada, Colombia, Dutch Antilles, Finland, Germany, Hong Kong, Ireland, Israel, Malta, Mexico, Serbia (a first), South Africa, South Korea, Sweden, and Switzerland, We start with the spate of  quarterly results. We have a sell.

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Election Day Again

Tue, 2017/11/07 - 12:31pm | Your editor

 Today is another Election Day one year after my polling place was invaded by Donald and Melania Trump and press, TV, and security details. I had to wait on line until they had voted and found Mr Trump rather scruffy looking in the flesh because his weight appeared to be higher than what his tailor measured, and Mrs Trump far more beautiful in person than in photos.

This time I get to vote for local government and the main news is that my eldest child is running for the school board in Cleveland Heights. Any reader there should vote for Ms Lewis as many times as possible.

Because we are having internet problems again, I am writing directly on the website because the pasted Monday issue did not get to everyone yesterday, and dealing with our webhost is a major hassle. Please accept that these tech issues are not my fault but reflect gaps in the system, notably updates from windows which hit and take over your computers during the weekend. Today we have a good company report and a bad update, both from Israel; and news from Switzerland, South Africa, Britain, Mexico, Saudi Arabia, Hong Kong, Canada, and the USA.

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Prince Wally and Wilbur

Mon, 2017/11/06 - 2:14pm | Your editor

Prince Alwalid (Wally) bin Talal, the Saudi royal buddy of western investors and occasional critic of Donald Trump, is now confined to the Ritz in Riyadh under charges of corruption while the investigation continues. While well known in western business circles as the investment manager for the royals, he is a member of the thirdh generation of descendents of King Ibn-Saud, which number in the hundreds. Being a second cousin offers no protection from Mohammed bin Salman, the heir apparent from a rival ranch of the royal family. Wally is on Forbes's list as the world's 50th richest person and holds stock in Citigroup and Apple.

In the west we do it better, because even serial adulterers like Donald Trump can keep track of their offspring and support them.

Wilbur Ross, the US Secy of Commerce, and Trump buddy since he financed the future president's bankruptcy in Atlantic City during a long career of buying bankrup firms on the cheap, is now accused of lying to Congress over a shipping company investment, Navigator Holdngs, transporter of gas for Sibur, owned by a son-in-law of President Putin's, Cyril (or Kirill) Shamalov. Sibur is a large Russian petrochemical firm.

Ross said that “what was evil” was the hint that he had not paid taxes on his stake in a Grand Cayman-incorporated entity. No, what was evil was the fact that he was violating an international embargo against Putin pals. Putin mistrusts anyone not a member of his immediate family. This was revealed by the “Paradise Papers” published yesterday mostly by the Guardian and the Sued-Deutsche Zeitung,

Trump is learning that he needs to mistrust his relatives, attention-grabbing advisors, and the Republican establishment in congress. And even old protectionist pals are looking after their own interests, not those of the White House. In fact they are behaving toward Trump just as he behaves toward them.

More for paid subscribers today from Finland, Britain, Colombia, Hong Kong, South Africa, Israel, Finland, the Dutch Antilles, Canada, Denmark, Mexico, and Switzerland.

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