Markets: Volatile And Mixed

Today markets are volatile and mixed. That's because the US dollar has hugely lost value against gold, which at one point was trading at $1935 per ounce. This is because holding bucks pays less interest than last week, so foreign holders are looking elsewhere to park their money. This is a matter of currencies and not of valuation. Goldman Sachs today predicted that gold will rise even more against the Greenback, to $2300/ oz.

The initial reaction of foreign markets to effective devaluation of the dollar has been fear, so apart from the Hang Seng in Hong Kong, which is propped up by Chinese authorities, and Ireland, a winner because British exit from the European Union is stalled, foreign market averages are all down. The fear is that US firms will undercut the locals because they can make money at lower prices. All that is true for the short-term, but longer term the risk is a rebound in US inflation.

Food

*Grupo Bimbo, the Mexican bakery MNC, gained 8.75% today. GRBMF

*I finally bought more Alimentation Couche-Tard, ANCUF on the pink sheets at $34.49 (US) per share. The problem is that my brokerage, BofA Merrill, will not let self-managed accounts like mine trade on this market and it will not trade across the border in Canada either. Nobody warned me although they knew the name of my employer which should have rung a bell. I dread another ACAT!

Banks and Finance

*Banco Latino-Americano de Comercio Exterior of Panama (BLX) which uses the dollar, today reported on its Q2 and the results were good, Its profit came in at $14.1 mn or 36 cents/share which beat consensus but was, of course, below prior Q2. Its revenue for H1 (reported more prominently than Q2) at $48.7 mn also beat but was well below last year's $65/7 mn. Operating expenses were cut 10%. In addition to trade finance, it was able to offer highly competitive debt services to emerging market borrowers (because of the sinking buck.)

Return on average equity was 6.4% in the quarter and 7.2% YTD. Return on average assets was 0.97% for the quarter and 1.12% for the half. Its efficiency ratio was 38.7% in Q2 and 41.5% for H1.

BLX shares are up nicely but still cheap because the name scares people. Its p/e ratio is 5.4x. The multilateral bank is owned by outfits like ExIm of the US and foreign state counterparts, other banks, and retail investors like us. It mainly finances trade in Latin America and the Caribbean but the funding comes in many different currencies. The bank will pay a dividend of 25 cents to shareholders as of August 10 on Aug. 25. It is up 11.9% today.

*AIA Group Ltd, AAIGF, rose 4.4% in Hong Kong today but fell 1.5% here. I think it can operate from another place in Asia if Hong Kong gets too hot for the life insurance business. Sampo Oij  SAXPY of Finland is up 0.33%. Swedish Investor IVSBF opened at $60. This is dollars in play

*Mexican REIT Fibra Uno will sell its factory sites and focus on retail and offices. FBASF.

Energy and users

*Azure Power of Mauritania which builds rooftop solar power systems in India today was named the Most Sustainable Company in the Solar Industry by World Finance, a magazine. Our source for the stock was Oeko-Invest of Austria, whose editor Max Deml is anti-carbon. AZRE, controlled by the Quebec pension plan, helps remote communities.It is socially responsible.

*After its surprisingly good results yesterday, Schlumberger Ltd. was tipped by venerable oil analyst Sarfaraz Khan today. He liked the cost cutting and layoffs of 21,000 staff and of course notes that if the dollar loses traction the price of oil will rise. SLB is controversial. Bank of Nova Scotia rates it neutral but cut its TP to $21 from 23. UBS upgraded it two notches to overweight with a TP of $19.5 vs $18 earlier. It is rated overweight by Morgan Stanley with a TP of $25 up from $23. Citibank rates it neutral. Take your pick. SLB fell 3.1% today. Oil stock fell, BP plc by 1% and Royal Dutch Shell B (RDS-B) by 0.9%.

*NIO rose 3.4% in Chinese trading today. It makes electric vehicles. NIO is up 5.9% here.

Health

*From London, our reporter, Martin Ferera suggests buying into the IPO this autumn of Covid-19 play AbCellera of Vancouver claiming they are very smart. However he sent me a Toronto Globe and Mail article I could not open as a non-subscriber.

*The big news today is that a blood test for Alzheimer's disease is within reach according to the New York Times online. It can find dementia risk 20 years before the degenerative disease causes memory loss and other problems. It turns out that Alzheimer's is a genetic disease. The test will be out in 2-3 years. The source for this was the JAMA Network Open at the Alzheimer's Association Virtual International Conference.

*Bausch Health Cos revealed that Glenview Capital Mgm owns 5.9% of its shares out. BHC.

*Danish Novo Nordisk NVO call volumes are directionally bullish.

*Astra Zeneca AZN paid Japanese Daiichi Sangyo to buy a cancer drug, up to $6 bn.

*Swiss Roche RHHBY did a $38 mn deal for producing Tamoxifin generics with US Immunic (IMUX) .

*Glaxo gained 1.37%. GSK

*Dr Reddy's, picked by Abhimanyu Sisodia, our India reporter, is up 1.64%. RDY.

Tech and Tel

*Ericsson ERIC of Sweden delivered its first US-build 5G base to my local phone company, Verizon. It also will deliver later this year to US Cellular. However its stock fell today by 1.2% because of the dollar in which these deals are priced in will be lower.

*Tel Aviv plans to create a securities-lending platform for block chain stocks.

*Qualcomm QCOM says its new Quick Charge 5 standard for Android phones the fastest and supports more than 100 Watts.

*After falling over India worries yesterday Vodafone is in the black today. VOD will list its cellphone masts business in Germany early next year. It is called Vantage Towers and VOD will keep a majority. The market moves are attempts to figure out how much the towers will be priced at which local tower companies will be included. For now it is Greece, its jv with Telecom Italia and possibly its half share of UK jv in Britain. VOD also won the Amdocs account in India.

BHC NVO AZN RHHBY GSK RDY QCOM

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Vivian Lewis 2 years ago Author's comment

I suspect that like me you can remember the earlier inflationary years. so buy physical gold as a hedge. vivian

William K. 2 years ago Member's comment

Did like this article! And I certainly agree that the long term result of the fed's policies and actions will be inflation. That was obvious to me from the first announcements, why wasn't it obvious to the Feds? Or perhaps it is far more on their agenda to protect the interests of their "friends"? At the expense of great damage to others?

And one nasty question is what will happen when it is time to repay all of those trillions of debt?? I predict that the debt will interfere with economic growth.