Weak Week

Friday tried a recovery act but at the opening the DJIA dropped 4.3% which put paid the hope that we can avoid another weak week. The recovery was because retail sales data for June were strong, particularly in dining out, although in the end, the weak tech side cut the optimism.

I mentioned the Ark-manager Cathie Wood's ridiculous claim yesterday that bitcoin should appeal to Environmental, Social, and Corporate Governance investors because the environmental price for the creation of bitcoins is horrendous. Ms. Wood's fund stock has fallen in value in 11 of the past 12 days.

Rogelio Ramirez de la O, a Cambridge (UK) educated economist, has taken over as Mexican finance minister. I hope he will help the current government get out of its unhealthy taste for state ownership, but I fear he will not be able to teach the current president much. Andres Manuel Lopez Obrador is an old-time lefty who finally got the top job.

Business newspaper article

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We have good news from our company of the year after a week of mystery price rises I could not explain. The news came from its homeland stock market, not from one we normally read about. Friday's Financial Times reported details of a spin-off involving two shares we own.

And we have two corporate earnings reports. One was from Investor which is too complicated to write up today, and I will put something out over the weekend. The other is a sub of Investor discussed below. The Swedes like to do it all in one day, which is tough for a generalist writer like me. 

Drug Dealers

*Genfit, the French drug discovery group, reported on its liquidity contract with Crédit Industriel et Commercial as of end-June. The bank acts as market maker in France and it reported net buys of euros 49,480 shares. This boosted the GNFT shares price to rise 2.5% today. More drug news below.

Tech & Tele

*Telefonakitebolaget Ericsson, ERIC, is our worst performer today down 10.8%. The problem appears to be the death of Swedish neutrality in response to US pressures over 5G telephony. It fell in Stockholm and the premarket today after China threatened to retaliate against ERIC because Sweden has banned Huawei 5G.

Ericsson most famous shareholder, Jacob Wallenberg, tried to get Sweden to lift its ban on the Chinese telephone equipment firm without success. China had given Sweden a last chance to remove the ban, which now means it will hit Ericson in the next Chinese 5G bidding round.

Today ERIC reported on its last quarter. Sales hit SEK 54.9 bn, off 1% (at about $6.3 bn) well below the consensus forecast of SEK57.3 bn. Its earnings before interest, taxation, depreciation, and amortization, a measure of cash flow, was SEK 5.8 bn, Analysts had forecast nearly SEK 6 bn.

However net income to shareholders beat at SEK 3.96 bn vs forecasts of SEK 3.6 bn. China sales fell by SEK 2.5 bn, about 52%, in the quarter to the end of June, and there was a further SEK 500 mn write-down of inventory and equipment for 5G contracts that didn't get written, according to what finance chief Carl Mellander told Barron's.

He also said that the write-down will not be repeated and the Asian business outside China helped offset some of that loss, as did an $8.3 bn contract with Verizon, also announced today. Its worldwide business, outside China and the Middle East/Africa region, saw strong organic growth.

ERIC also expects its radio access market to close the year up 10%, up from prior guidence of 3%.

*Finnish Nokia fell 0.08% on the news but NOK is unlikely to gain at the expense of ERIC.

*South Korean Coupang fell back 4.7% today and CPNG is back down 10% from our basis. It is suffering because of higher Covid-19 cases and Deutsche Bank cutting it to hold from buy.

Latinas

*Royal Dutch Shell and Brazilian Cosan, RDS-B, and CSAN will list their Raizen ethylene energy sub in São Paulo to raise at least reais 6.9 bn, or $1.34 bn. The price will be reais 7.4 to 9.6 per share and the duo will retain control of a majority of the stock in the refinery and gas stations of the duo. Ethanol is produced from bagasse, the waste from sugar-cane production, and used for fuel, and for making plastics, beverages, cosmetics, and pharmaceuticals in place of carbon-spewing standard fuels. The share will have global appeal and I expect there will be a USA ADR, but this may take a while. While Cosan as been rising all week, it rose another 0.81% today on the news after opening down 0.72%.

*Another hard-to-track Latin stock. Orbia Advance, which continues to use its old ticker symbol, MXCHF (for Mexichem) will hold a conference call on July 28 post-market. I hope there will be news about a new ticker because the spreads the market-makers are putting on MXCHF are huge.

Exit Strategy

*Energy Fuels (UUUU) and fellow Canadian International Consolidated Uranium, (CURUF, which owns 1 Quebec site) will buy into the former's convetional uranium projects in the US (in Colorado and Utah). This will let CURUF become the toll-milling and operating partner when the uranium market improves. UUUU will remain a partner but it will collect US $2 mn at the closing and C$6 mn over the term and C$5 mn when commercial production starts. It will also own 19.9% of CURUF. CEO Mark Chalmers claims that the deal is a “win-win” for UUUU and its new partner. He will join the CURUF board and will be paid a management fee for ore produced in the US and Australia. UUUU fell 7%.

*Canada's CAE gained on news it will use artificial intelligence in developing its Project Resiliance with backing from both the Federal government and Quebec Province totaling C$340 mn. The program will include systems for managing air taxis and light aircraft. Until now CAE was a pilot and medical evacuation training company using simulators. The stock is up 0.8% today.

Finance

*Prosus, PROSY, of the Netherlands is up on its offer of cash for two Naspers notes in South Africa, along with NPSNY—despite looting and riots. The Dutch clone will refinance $2.2 bn of notes issued by Naspers, the 5.5% of 2025 at a 35 basis points spread and the 4.85% of 2027 at a 105 bp spread. PROSY was created to enable Naspers to go international because it is such a huge component of the South African Stock Market. Now it is the easiest way to exit the riot-torn country.

*Atlantica Yield, the UK fund investing in green energy, AY, rose 1.3% today. The 44% owner, Algonquin Power of Canada, AQN, gained 2%. Our latest buy in this complex, AQNB preferreds, rose 0.21%.

*Insurer AIA Hong Kong, AAIGF, gained 5% premarket but now is up only half that. It is expanding its business all over the Asia-Pacific region.

*Investor A/B, despite Wallenberg losing its attempt to salvage ERIC, rose 2.54%. IVSBF.

*Kirkland Lake Gold fell 2.7% today with the gold price. KL.

Ute & Energy

*EON.SE, a German low-carbon green energy producer, is up 1.25% today perhaps because of EONGY will gain from the horrendous floods in western Germany.

*Veolia Environnement is also up, by 1.6%. VEOEY.

*Ormat, ORA, the Israeli-American geothermal energy firm, is up 2.3% today.

Drug Dealers continued

*Eisai of Japan fell 8.2% over concerns about its license for Aduhelm from Biogen. ESALY.

*Israeli small caps Compugen (CGEN), NovaCure (NVCR), and Cerus (CERS) gained 0.75%, 0.31%. and 1.67% when Tel Aviv was closed. But BiolineRX (BLRX) fell 3.6%.

*My leading US holding, Thermo Electron, TMO, is up 1.2% after being initiated with a buy rating by benchmark with a $580 target price. It is $520.5 today. It opened a cGMP plasmid DNA manufacturing facility in Carlsbad CA to boost clincal trial cell sample availability. cGMP stands for current good manufacturing practice.

*Enlivex which will build a new CGMP plant for Allocetra trials in Israel fell 3.45% today. ENLV.

*Zymeworks is up 2.45% today after presenting at a Ladenberg Thalmaan conference yesterday. ZYME is believed to be a takeover candidate and3/4 owned by institutions. It was picked by Martin Ferera.

*European drug majors AstraZeneca (AZN), Glaxo (GSK) Novartis (NVS), Novo-Nordisk (NVO), and Roche (RHHBY) are all up.

*However TEVA fell 1.94%. It is a large-cap Israeli.

*Esperion Therapeutics gained 0.5% today. It makes cholesterol cutter pills. ESPR.

My Mexican tech team has completed the work to create a new website. It will go live next week so people will be able to subscribe and renew online. Doc P, VYAs, and Kenn will have to pay again to ...

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William K. 1 year ago Member's comment

All fuels from organic materials produce carbon oxides when they burn. This can be verified for you by any chemist. In addition, while making alcohol from bagasse, more energy is usually required than is made available. But at least it is not bidding up the price of food (corn). Fuel from food has done a lot of damage to the many populations that consume a lot of corn. Thus it is damaging to those who are not us.