Problems To Come
I am slowly taking back my life after being pick-pocketed last weekend. Today the purse snatcher seems to have gone into attack mode. First I was sent an incoherent message via email in Russian about an alleged article about an Australian virologist supposedly written by me for publication. Then I started getting calls from a man with a thick Slavic accent offering drugs for the relief of pain. My company account was used for the article query and the telephone call so I think it is the purse thief getting even with me because he could not get gold-plated sneakers with my credit cards. Or maybe just a disgruntled subscriber...
image source: unsplash
A hint of problems to come is the latest stock to hit a new high in London today, Flutter. It is a bookie firm working on-line to let Europeans bet on sports games and horse races. This kind of thing is what happens when markets get over-optimistic when borrowing is cheap because of low-interest rates when people who normally just like to bet move into the stock market with little real experience of how things work. I remain highly skeptical that the rising tide will continue to boost all boats out there. Note that because of regulatory issues, there is no Flutter ADR.
Another sign of excess is the reversal of Goldman Sachs's view of Tesla, which it downgraded to neutral about 5 months ago. Since the stock rocketed up, GS has reversed itself and now rates TSLA a buy. This is another hint that markets are due to correct.
Perhaps the biggest risk for bulls is the likelihood of higher taxes on capital gains and inheritances being planned by the future Biden Administration. While the full monte will only be legislated if the Democrats win the two Georgia seats being voted on Jan. 5, the odds are rising for them. Both of the Republican Senate contenders have extensively traded stocks based on what looks like non-public information they got from closed Senate discussions on corona-virus and other sensitive matters affecting their portfolios. This is probably illegal and certainly unfair.
More follows from around the world.
Materials
*My best performer today is UUUU, listed on the American Exchange, Canada small cap Energy Fuels Inc., a money-losing firm rated buy by Wainwright, Roth Capital, Rodman & Renshaw, and Noble Capital. It has started producing rare earths in Utah. It trades in Canada as EFR. The rare earths are found together with uranium. I was planning to tip it for US buyers but worried because there was an unexpected brokerage fee for buying it here. Now I am going to tip this stock as a way to end America depending on evil countries for rare earth supplies.
*Antofagasta ANFGF, a Chilean mining company, is up again by 5.74% today, on demand for copper as the world expects recovery from lockdown next year.
*Gold-miner Kirkland Lake is down 1.85% despite gold being up. It is riskier to dig the stuff up than to trade it. KL is my worst performing recent stock pick. I blame Goldman Sachs for tipping Bitcoin stocks today along with Tesla. It used to be a key market advisor, but it is losing its clout with switches.
Internets and Tech
*In cash terms, given that I don't pour huge amounts of money into small caps, my best performer today was Mercado Libre, up 2.2% to $1555 and change. MELI is the Latin American company offering internet services including shopping and paying in, among other places, the Amazon basin.
*My trades yesterday got me more TCOM at $32.9699, with money from the sale of half my remaining shares of NIO at $54.995. TCOM is $35.12 today.
*NIO today is at $45.91, so I got that one right. We still own a third of the original buy of the Chinese electric vehicle maker which I consider a high risk play. I use limit orders which is why there are these 99's all over the place.
*Trip.com gained 6.27% today hitting $35.22, a quick gain. It may lose traction because New Street brokers cut its status to neutral from buy yesterday.
*Harry says MultiChoice is a good guy among African internet stocks and as the price is lower, MCHOY is another tech idea to consider. It offers streaming videos, telco, and payments in Sub-Saharan Africa, and was spun off by Naspers (NPSNY, up 2.4%) which he also thinks are good guys. Harry is our Africa hand having served there for ages.
Energy
*Another new broker rating, from Stanford Bernstein, upped Royal Dutch Shell to outperform from neutral. RDS-B rose over 2%.
*Dutch Antillean Schlumberger, SLB, gained 3%+ today.
*BP plc topped the lot up 3.6%. The world needs oil for now even if we convert to electric vehicles for Nio and others. Both UK shares fell today in London but rose here.
*Utilities are the comeback kids. Don't let oil and gas blind you to the charms of alternative sources like Algonquin Power & Ute, AQN, up 2%; Harry Geisel's tipped Atlantica Yield, AY, up 0.6%; Azure Power Global, AZRE, up 0.46%; Canadian Solar, CSIQ, down because of its Chinese ownership although it reports normally in Toronto. I'm adding to my stake; Veolia Environnement of France lost 0.5% and I am buying VEOEY too, despite brokerage charges for the ADR. One reason is that their dredging sub is operating outside my kitchen and dining room in the East River.
Drugs
*Israeli drug startup Compugen is up 5.25% today. CGEN is reviving and because trading Tel Aviv shares is tough on Friday when its market is closed, Thursday is your last chance to arbritrage.
*TEVA gained 3.2% today for the same reason, topping $9.96/sh.
*Israeli Bioline RX, BLRX, is up 1.2% because it will trade not tomorrow but Sunday.
*Beigene BGNE saw insider selling. It fell 1.77%. Don't buy shares that fall after a new issue of 1.5 mn shares by insiders, not the company itself. They know more than we do. Beigene may be out of compliance with accounting standards, the latest issue for Hong Kong stocks.
*Aurinia, a second outfit from British Columbia tipped by Martin Ferera, is up 0.9% at $14.78 (US) AUPH was bought after a poor earnings quarter as our guy has sources. He will produce a report on a forthcoming IPO that will only go to paid subscribers as we resume normal business next week.
*Because Britain opted to buy the Pfizer corona-virus jab despite difficulties on keeping it cold, the local rival, Astra-Zeneca, AZN, whose drug trials were confused, has fallen by 1.8%.
*Glaxo, GSK, was downrated by UBS to hold from buy, why this British stock fell 0.45%.
*Exelixis, a US share I own, bought the license of Iconic Therapeutics's tissue factor targeting antibody conjugate for which it had an option, and will take over the production and development of what is now called XB002. It will also take over Zymeworks' proprietary Zymelink linkage which enhances safety and we hope efficacy. EXEL will start phase I FDA trials early next year if it wins permission to. EXEL will pay Iconic $7.5 mn upfront and an option exercise payment of $20 mn plus future milestones and royalties if it works. Martin, who recommended ZYME, says this counts as a second validation of the ZYME two-prong attack on tumor cells, after one done by ZYME itself. ZYME has fallen despite the validation and a buy recommendation from Raymond James yesterday.
Financials
*AAIGF, AIA Group Hong Kong shares, are up 3.6% today because as a spinoff of a US firm, it meets normal accounting standards. Much of Hong Kong does not. China has opted to let some of its wilder financial stocks default on their loans rather than covering them.
*Rumors that HSBC is shutting its US retail branch network to invest more in Hong Kong has hurt its local sub there, Hang Seng Bank. We owns HSNGF because the tracking of the HK index will continue despite Chinese crackdowns on civil liberties and opposition in Hong Kong. But Beijing is reckless.
*Scotiabank is up 1% because Canada is a country that matches US banking standards. BNS.
*Banco Santander is a global player meeting regulations in many countries, so SAN stock is up 1.5%.
*Having a respectable banking overseer means Japanese financials like Mitsubishi and Sumitomo should be looking good, but in fact, MSHBF is up and SMFG is down. I think this is random noise.
*Sampo Oij lost traction but Investor A/B rose. Both are properly regulated so it is probably currency factors. SAXPY, IVSBF.