I bought SGBK (SGBK) for my IRA at $30.23/sh. Reader LM commented:
“Your Stonegate Bank obviously will be well positioned to offer real estate finance for those Florida Cubans who want to get in on the ground floor (literally) via their relatives.”

Russell Jones, an Australian economist at London's Llewellyn.consulting.com argues that we should go back to Swan Diagrams, invented by an Australian economist and central banker. Swans diagrams could replace or complement the investment-savings/liquidity preference-money supply targets favored by economists today. Jones writes:

“Debate over macroeconomic policy should not be confined to the actions of central banks. “Notwithstanding the increasing hegemony of inflation-targeting regimes over the past 30 years, stabilisation policy should aim beyond relative price stability.

“In an ideal world, the ultimate objective of policymakers should be to maintain an economy in broad balance, externally and internally.

“An ingenious depiction of the issues involved in concurrently achieving internal and external balance was pioneered in the 1950s by Australian Trevor Swan, in the ‘Swan diagram’. ‘Swan diagrams’ formed a core of the undergraduate economics syllabus in the 1960s-70s. They have since been supplanted by often more sophisticated, though less user-friendly, diagnostic tools.

“A Swan diagram enables [one] simultaneously to assess an economy’s progress towards both over-riding objectives of macro policy: achiev[ing] full employment and relative price stability (internal balance), and balance on the current account (external balance). [It is done] using two macroeconomic instruments: the real exchange rate, and manipula[ting] real domestic spending through monetary and fiscal action.

“Only by employing both instruments in appropriate direction and degree, can policymakers achieve both internal and external balance. Policymakers also have to grapple with uncertain leads and lags, unavoidable data shortcomings and revisions, and political practicalities [that] can dilute or distort policy.

“An economy actually achieving overall macroeconomic balance is very rare. Nevertheless, Swan analysis provides a useful approximation of the policy mix a country should adopt towards this end, while offering an early warning when economic strategy is veering dangerously off course.” (Reprinted with permission.)

More follows from Finland, India, Britain, Mauritius, Belgium, Israel, Ireland, Spain, Canada, Papua New Guinea, and Congo Brazzaville including a quarterly report.

*Delek Group (DGRLY) beat its target for delivery of Q1 results of Thursday by one day. Net income at NIS 210 mn, followed a prior year net loss of NIS 195 mn. A similar reversal, from negative NIS 397 mn to positive 137 mn in the first quarter was shown in operating profits. Revenues rose 10% to NIS 5.5 bn over Q1 last year.

Delek Group sale of Delek US shares contributed a non-recurring gain of NIS 115 mn in Q1. DGRLY in 2014 also partly exited insurance businesses to focus on oil and gas, so the figures are not comparable. Delek Group is now is a more focused business, after selling various non-core assets in 2014. Delek Automotive contributed NIS 78 mn, mainly from realizing value from US-listed Mobileye (MBLY).

Delek is still in negotiations to sell control of insurer Phoenix Holdings Ltd. in Israel to Fosun, a Chinese insurer, as I reported this week.

The Tamar gasfield sold ~1.97 bn cu meters in this Q1 vs 1.7 BCM last year and energy and power contributed NIS 67 mn to Group net income this Q1 vs NIS 38 mn last Q1

Besides asset switches, Delek also did buybacks, and it used NIS 130 mn of the authorized NIS 200 mn YTD with the rest still available for use.

It now plans to develop its larger 22 trillion CM Leviathan offshore field flat out after the Israeli trust-buster resigned. Israel last month allowed Tamar to sell natural gas to 2 Jordanian firms, Arab Potash and Jordan Bromine. In May the Israel Electric Co. upped its gas offtake to 87 bn cu ft. A dividend of NIS 12.7761/sh will be paid June 18 to shareholders of record June 4.

*Goldman Sachs advises iron ore miners not to try to set up a cartel to cut supply because there are 3 majors, including our Vale (VALE). Cartels work best with only 1 or 2 members, the analyst says, citing the potash one which includes the Jordanian firms above.

*Belgian Galapagos NV (GLPG) reported on new major institutional shareholders after its US ipo:

-Capital Group Cos. since 19 May 2015, held 1,795,935 shares, representing 4.68% of the current 38,403,176 outstanding GLPG shares compared to the 1,554,436 shares reported on 5 September 2012.

-Fidelity Management and Research LLC, since the same date held 2,732,508 shares, 7.12% of the shares out, its first holding.

-Federated Equity Management Co of PA from 14 May controlled voting rights for 2,238,000 shares (5.83% of outstanding shares) in funds it manages, again its first holding.

We have owned it patiently for years after it hired our former Milan-based Biotech Maven who had a good eye for profitable startups.

*Canadians Barrick Gold (ABX) and Ivanhoe Mines recently signed separate partnership deals with Chinese Zijin Mining Group Co. to help advance projects in Papua New Guinea and the Democratic Republic of Congo.

Deals with Zijin culminate long-term plans to find a Chinese partner. ABX Chair John Thornton set China relationships as a priority since joining 3 years ago and also aims to cut debt by selling assets. Now Barrick agreed to sell to Zijin a half stake in the unit managing the Porgera gold mine in PNG for US$298 mn. Porgera will produce 500,000-550,000 oz of gold this year. It is 95% owned by the Barrick Niugini Ltd.sub and 5% by the PNG govt.

Barrick Monday announced sale of its Australian Cowal mine to Evolution Mining for $550 mn.

*Writing in www.seekingalpha.com, Lars Christian Haugen preferred Cameco (CCJ) to other uranium firms: “Cameco comes out on top with an average [gross] margin of 37.6%, with Kazatomprom a close second at 31.3%. Areva and Paladinare neck and neck with average gross margins of 13.9% and 13.5%, respectively. They both have negative margins in 2014, which means their costs of sales were actually higher than their revenue, a very bad sign. [This] shows that [CCJ] are good at keeping costs of mining uranium low, a source of competitive advantage in the very capital-intensive resource industry. This is a sign of strength and suggests Cameco is better than its competitors at managing its primary business.”

Ed: Kazatomprom is an unlisted state-owned Kazakh entity whose accounts are irrelevant.

*Nokia (NOK) in Q3 for an undisclosed amount will buy US firm Eden Rock Communications to boost its telecoms network equipment offerings with mobile broadband automation, performance enhancement, and reliability. NOK was up 2.6% on the news.

*Theron Mohammed wrote in Investors Chronicle that “the UK”s own Vodafone (VOD) could well be dragged into the mergers and acquisitions action.”

VOD is less leveraged than the major players like John Malone's Liberty firms and Patrick Drahi's Altice but not risk-free. From 2012 to 2014, VOD distributed a special dividends made up of proceeds from the Verizon Wireless (VZ) jv and then last year made a distribution of the proceeds of exiting the jv. 

*UK Daily Hotline opened a short position in CRH as it encounters medium term price and relative resistance at 1,900 pence. The chartist service, with which we trade ideas, has a 1,400 p target price and a stop at 1,920 p. Noted but not copied. CRH rose 3.4% in recent US trading.

Abhimanyu Sisodia writes two items from India and Vivian a third:

*Infosys (INFY) set aims to achieve $20 bn in revenue by 2020, Lord Krishna willing.

*Vedanta Ltd (VEDL) will buy up to 100 mn shares (5.33%) of its oil sub Cairn India for 220.40 rupees (~$38)/share from Twin Star Holdings Mauritius (controlled by group head Anil Agarwal). VEDL currently owns 59.9% of Cairn, with Twin holding 34.08%. Twin was the parent of VEDL when it was SSLT (Star Sterlite which we bought before the name change.) Our VEDL is now controlled by UK-listed Vedanta Group with 52.5% of VEDL.

Vivian adds: this card-shuffling is typical of Asian family controlled firms but can be abused.

More Heavy Industry

*From the Tata Motors (TTM) conference call: “From the balance sheet of Jaguar LandRover, the spend on capex and product development last year was £3.1 bn. Even after spending this amount, JLR continues to be free-cash-flow positive with an amount of £791 mn. The gross debt [in] the JLR balance sheet is £2.5 bn. After subtracting the cash and equivalent of £4.3 bn, net cash is £1.7 bn.” That is what Abhimanyu means by “a cash cow”. TTM is facing competition in its key India truck line from Daimler which is opening a plant to gain from lower taxes on locally-made vehicles. It was called “short of cash” by Barron' Asia blog.

*CLSA describes the advancement of unconventional drilling and completion as one of the most disruptive technologies in oilfield history, likely to derail the cyclical normalization and trigger a number of structural consequences: the analysts prefers large caps like Schlumberger (SLB) "that have and will continue to facilitate the change, not those that will be impaired by the change." SLB

Finance Fingers in Cookie Jar

*Bloomberg writes about Royal Bank of Scotland (RBS), whose preferred share we own. They do not reduce payouts for fines. “NYSE:RBS is one of the few lenders who have yet to settle with the FHFA over MBS sold to the GSEs during the housing boom. Bloomberg Intelligence analyst Elliot Stein figures the final settlement will be closer to the $4bn JPMorgan paid rather than Deutsche Bank's $1.9 bn. RBS is seeking to have the case dismissed, but good luck with that. Both it and Nomura lost a separate FHFA case earlier this month.”

*Maybe one reason Banco Santander (SAN) was up 2.5% recently is because it has not been caught with its fingers in the cookie jar over Libor and Forex fixing cartels.