A day after he warned about inflation risks in the Financial Times, Mohamed El-Erian, president of Queens’ College, Cambridge university and adviser to Allianz ALIZF, a German insurance company, warned about inflation risks in US media. He wrote: “the labor market is getting scary”. Supply problems can lead to inflation. Actually, there are also problems hiring people needed in the USA. 850,000 people were new hires in June, very much higher than the consensus estimate of 706,000. The unemployment rate was 5.9%. If qualified people are not looking for work, they will have to be lured to do so with higher wages. To pay the higher wages, companies will have to raise the prices they charge for goods and services. Whoops, that takes down the buck and hurts investors.

image source

I am impressed that El-Erian can write the same article for Brits and Yanks. He is currently British-based but is an American citizen.

Tech

*Another day, another mess from seekingalpha.com. For the second time in a week, the financial news provider wrote about Taiwan Semiconductor, NYSE-TSM, the largest maker of chips on earth, and headlined the article with the ticker symbol of its mini US-Israeli rival Tower Semiconductor, TSEM, which trades OTC. We own both. And both rose today but the Israeli stock is likely to lose when investors realize what happened. Tel Aviv is closed Fridays, the Muslim Sabbath, but will be open Sunday and Monday when US markets are closed. If you own TSEM you may want to cut back your position. Chips are in short supply but the firm from which Apple reportedly bought semiconductors made by the 3nm process was Taiwan Semi. The news also affects other stocks based on the island which China is seeking to add to its territory. TSEM is up 0.25% to 29.44 while TSM gain 0.1% to 118.75.

More for paid subscribers follows:

*Our shares of Taiwan Fund (TWN) galloped up 1.79% to $35.62. The shares gained despite the happy-clappy celebration of the 100^th Anniversary of the Chinese Communist party. Boss Xi Jinping, dressed in a Mao suit, said China wants to add Taiwan to its territory.

*Never underestimate the stupidity of reds. China is blotting its copybook by starting a regulatory review of newly-listed Didi Chuxing for cyber-security violations.

*The new CEO of Qualcomm, Cristiano Amon, is taking on both China and Apple with its new laptop chip with better performance. QCOM is up 0.75% on hopes to $141.86.

Cars and fuel

*NIO dropped 2.92% over Xin Jiping implying that its autos will also be subject to Beijing interference. NIO is backed by a provinical city where it is HQ'd, not by the capital. It started out up because Tesla for the first time dleivered over 200,000 vehicles, in fact, 201,250, to Chinese buyers in Q2. This was below the consensus estimate. However, Fei Chen's original China car pick, BYD, now owned by Shaanxi, did best. Fei moved to China and stopped writing. Later NIO was down less than 1%. CFRA rates TSLA a hold.

*Ecopetrol, the Colombia govt controlled oil company, is now moving into Asia with the creation of a Singapore holding company. It plans to later create a 2^nd Singapore company to trade crude and oil products not just from Colombia, which has a geographic edge because it is on the Pacific Ocean, but also for other producers of oil and refined produces. We sold EC when the state took control.

*Mitsubishi Motors, a sub of the Japanese zaibatsu, rose 3% today despite the resignation of its electric arm's CEO for fake invoices. Mitsubishi, MSBHF, then corrected but is still up 2.78% at $27.93.

*BP plc rose fractionally after the consensus estimate of its Q2 eps was raised 0.009% to $27.08. Later it fell back to $26.82, just under 1% because there's a long weekend ahead. Royal Dutch Shell B RDS-B fell 0.6% and its A shares, Dutch traded, fell 1%. We will be 3 days at the mercy of OPEC.

*Curacao's Schlumberger fell 1.5% before recuperating a bit to $32.67. SLB is more US-based.

*Earthstone Energy, a big gainer in Q2, is down 3.38% today. ESTE gained 17.5% yesterday.

*Alimentation Couche-Tard regained another 2.61% to $37.72. ANCUF runs gas stations.

Drugs

*Glaxo CEO Emma Walmesley got a boost from its board against the attempt to remove her by Elliott, a Yankee hedge fund. It also signed a deal with Alector to develop 2 neurodegeneration drugs, one already in trials for frontotemporal dementia caused by gene mutations. GSK will pay $700 mn up front plus up to $1.5 bn in milestones. ALEC is a California firm whose stock gained 60% on the news. It is another female-headed business, run by Shehnaaz Suliman MD, MBA.GSK also had its Q2 eps estimate cut 2¢ to 57¢ from 59¢. Assuming that Elliott did not buy ALEC stock before trying to oust Walmesley, they came across as US male chauvinists aggressively interfering in the management of a UK enterprise.

*Astra-Zeneca rose in sympathy although it is not female-headed, up 0.65% to $60.7. AZN.

*Compugen recouped over 0.3% despite Israel being closed, o $7.97. CGEN.

*TEVA fell 1.64% in anticipation of a long weekend, to $9.92.

*Israeli Novacure was downgraded by Mizuho over the latest results of its phase II liver cancer trials for Hepanova, which disappointed. I thought that given these patients were no-hope and found that the 9.5% level of response seemed good enough to proceed to wider phase III testing. Mizuho wanted to see 20% and downgraded NVCR to neutral from buy. To be totally fair, the Japanese analyst agreed that “one explanation for falling short on objective response rate in the current phase II trial is that more severely sick people were included in the trial of its TTP field. NVCR opened off 3.77% to $189.82 and now is at $182.19.

*Eisai was among the top 10 performers in the drug sector in H1. ESALY gained about 42% in June at one point hitting $129.79. It pays an annual dividend worth 2.3%. Today it fell a bit to $97.5.

*Merck withdrew its US accelerated approval application for Keytruda in gastric cancers and rose 0.8% to $786. MRK.

*Zymeworks lost 0.32%. Canadian ZYME is a takeover candidate.

Materials

*Weyerhaeuser, WY, a timber fund, recovered 0.64% today to $34.55. It fell hard in June. The Canada group is 83% owned by institutions and was tipped this week by Zacks as an infrastructure play.

*ABB ltd of Switzerland, which we own two ways, directly and via our Investor A/B fund, IVSBF, rose 1.67% today on stimulus hopes. (Finnish Sampo, SAXPY, with no ABB, rose .77%.)

*Antofagasta rose 0.15%. to $20/sh. ANFGF, whose ADR comes from the UK market, mines copper in Chile.

*Kirkland Lake Gold, KL, rose 1.14% on the gold price rising.

*Stock for the year Cosan is up 1.73% today so we are ahead again with CSAN. It sold its gas stations in Brazil and Argentina operated together with Shell. 

*Ute E.on SE, EONGY, hit $12 before falling back a bit here today. It is now $11.77. 

*India serving Azure Power of Mauritius was again a top performer, up 3.05%. Earlier AZRE was as high as $28. 

Chow

*Grupo Bimbo rose 4.76% on no news. It is a Mexican multinational dairy firm. GRBMF.

*Israel Chemicals which produces minerals from the Dead Sea, sold, today bought a unit of Brazil's Compass Minerals for $420 mn. ICL is majority-owned by funds and is heavily shorted. NYSE-CMP produces potash and fertilizers for which there is growing demand from non-Belarus sources.

*Nutrien of Canada however fell 1.44% to $60.52 after opening a dollar higher. NTR.

*Tomra Systems of Norway gained 5.3%. It makes recycling and sorting machines for bottles, foods, and pharma, but gains with the Kronor. TMRAY.

*Alimentation Couche-Tard won a buy rating from CFRA with a higher TP of C$6, to C$52.18, and a 2022 eps estimate of $2.86, up 24 loony cents. It also runs gas stations but also runs highway dining and food stores and others in cities. It was our best performer today last month (up 15%) and may resume its rise. ANCUF.

Banksters

*Banco Santander fell. It aims to buy out minority shareholders of its SAN Consumer USA at $39. It is adding to its US retail banking presence. 

*We own shares of Atlantica Sustainable Infrastructure, up $1.06 today, both directly as AY and indirectly through Algonquin, which is at $15, down 0.16%. AQN owns nearly half AY which is British but priced in US $s. 

*American Express shares are buoyant, up 1%. AXP.

*Scotiabank of Canada is down 0.9% to $64.98. Canada is celebrating its own day today. BNS.

 *Hong Kong's AAIGF, AIG Asia, is up 0.88% despite China holding a holiday.