Even before the Pope hit NYC, my 7 am newspaper delivery was short The Financial Times. I don't think it was shipped from Japan now that Nikkei owns the pink paper, but “who am I to judge?” On a day when everyone is quoting Yogi Berra, I want to quote Pope Francis.

The handshake between the head of FARC and the president of Colombia Juan Manual Santos (with Raul Castro holding their hands down) marks the conclusion of negotiations over ending the 5-decades-long guerilla war on Colombia's governet. This should result in a peace treaty in six months or before. The arrival of Senor Santos marked acceptance of a fudge over punishing the rebels, most of whom will be amnestied and tried by a special tribunal and not jailed. They may have to do public service or suffer house arrst. Only those who committed crimes against humanity or war crimes will not be amnestied and have to help with de-mining, which is dangerous. Victims will get reparations in all cases. But the devil is in the details. We have a stock for this.

The latest whizz in exchange traded funds is ETFs covering global markets overall or the emerging markets or even the BRICS—while excluding China. How much simpler to just buy stocks!

For whatever it is worth, after a 3 day market shutdown, Tokyo re-opened sharply down. 

Finance

*After Ana Patricia Botin presented new targets at Banco Santander's (SAN) Investor Day on Wednesday, the share actually fell, mainly because her plans to cut costs, above all in Brazil; up earnings; and boost capitalization ratios failed to impress investors. SAN stock has continued to under-perform the European banking sector all this year.

The main problem is that SAN is a hodgepodge with a global presence built up by Ms Botin's late father, Emilio, who snatched at bargains when offered. Crafting a way to continue to grow without overpaying (for example for HSBC's Brazil arm) requires disciplined management, which will take time and require better return on equity. Ms Botin, with UK experience, was caught flat-footed when the government there opted to impose a new 8% tax on UK bank profits, after she was instrumental in bringing on tighter management controls and removing management layers on the banks her father had acquired during the global financial crisis. She aims to boost its equity bumper against bad loans.

Profit falls may threaten our divies even after the capital increase at parent SAN early this year. I think some of the sniping is because CEO A.P.Botin is a woman and the designated heir of the former chief at the Spanish bank, 2^nd largest in the Eurozone. She presented a 3-yr plan to boost earnings to double-digits by 2018; get 15% more customers (15 mn in all) and 33% more on-line customers (20 mn). She also aims to bring ROTE (return on tangible equity) to 13%; and cut overheads to below 45% of earnings vs nearly 47% now.

*Pimco, the investment management arm of Allianz Insurance (AZSEY), has greatly outperformed its former rainmaker Bill Gross in bond fund returns. Gross's followers at Janus Capital have lost 2.5% in the first year since he walked out. Pimco's flagship Total Return Fund gained 1.7% over the same period. We bought Allianz right after the Grexit and suffered as investors fled from Pimco. Revenge is a dish best eaten cold.

Now the California fund manage will also cut staffing levels with underperformers let go. This should help the German parent, AZSEY. The fund now will settle at around $100 bn in assets under management (half what it was under Bill Gross) and may even lure in new money.

Pimco argues that while bad for European unity, the influx of refugees is probably a shot in the arm for economic growth in the EU, because it will provide workers to support the mounting population of retirees. Apart from pension funding, the newcomers will also boost domestic demand, particularly in AZSEY's homeland of Germany.

Pimco likes Europe overall as the central bank policies “are gaining traction”, wrote Mark Arney in its quarterly review. “QE and negative interest rates are a powerful combination and 6 months into the program there are already some tentative signs of success.” He adds: “Fiscal policy is no longer a drag on growth in the Eurozone. Ireland, Greece, Portugal, Spain, and to a lesser extent Italy have made considerable progress on structural reform. The bifurcation in [eurozone] economic growth in the aftermath of Europe's sovereign debt crisis is dissipating.”

He also wrote: “There will be some challenges for the export sector; however this recovery is becoming an increasingly domestic affair.” Germany as exporter and Asia as importer are likely to be most “under pressure.”

Heavy Industry

This leads me to a new stock pick for our readers: not Volkwagen but Fiat Chrysler, (FCAU). It was on Thursday that (VLKAY) was downrated by analysts at Bankhaus Lampe in German to sell (verkauf) from buy (kauf). I doubt a new insider Porsche head of the firm will be enough to save it (why we are not buying back into Abengoa, (ABGB), in case you were wondering.)

My main reason for tipping Big Board stock FCAU is that its bid for GM is likely to go into overdrive after the VW scandal. VW, a potential buyer of GM, is now off the highway. GM would find it hard to build out its own multi-vehicle emissions systems, not just for diesel but also for gasoline cars and trucks. And tighter controls are surely in the works.

The Unijet Turbo Diesel (UTD), used by Fiat, was developed by GM Powertrain, during their earlier 2005 aborted joint venture and continues to be upgraded for the Fiat minicars like the Punto and the Panda and GM vehicles like the Opal German, Vauxhall British and Cadillac and Chevrolet US diesels. So getting together makes even more sense now. While of course UTD exhausts may also have been fiddled with, the technology is very widely used by other carmakers in more than a dozen configurations: by Ford, Tata Motors, Suzuki, Peugeot-Citroen, Lancia, Saab, Jeep,and Alfa Romeo. I find it hard to believe that so many competitors fiddle the nitrous oxide emissions of the UTD diesel, but I also think that the great concentration of regulators on emissions software will make it costly for GM to prove that its systems are not being gamed for emissions testing.

Another reason is that car stocks are all be garaged starting from Thursday, not only because of VW, but also because of Caterpillar.

Moreover that green and humble car advocate, Pope Francis, was hauled in from Dulles airport the previous week in a Fiat car, and Fiat also made the Popemobile. Of course that was because the HQ of Fiat is just north of Rome in Turin,

And unlike while Volkswagen's plans to build its cars in Mexico are not likely to achieve fruition, Fiat will add Mexico production to emerging markets where it already builds cars like Brazil; Poland (via a jv with Suzuki) and Pune (India, via a jv with TTM, sold). It also has a plant in Poughkeepsie up the Hudson from here. Its Brazil plant now produces electric cars, a greener alternative for California and Brazil, under a jv with Cemig and Itaipu, so even if diesel is debunked as a cheap green fuel, there is another coming.

While there will be speedbumps with any US deal, FCAU has experience in driving in this country. First of all its links with Chrysler and Dodge have been subject to autoworkers union picketing over an alleged pay gap with GM, CEO Sergio Marchionne has managed to get a renewal contract through earlier this month.

Fiat also has experienced the nasty US recall process. Last summer FCAU was fined $105 mn for how it handled recalls of Ram pickup trucks, Dodge Durango SUVs, and Jeep Cherokees because of safety risks. A total of 1.6 mn vehicles were affected, but the complaint had to combine several recalls. Fiat was fined over failing to find all the owners. Most reassuring to me was that the problems for which most of the recalls were called involved security flaws allowing remote electronic manipulation of the vehicle systems, hackers taking charge of the vehicles and shutting down their electronics. The other recalls were over faulty airbag seat pretensioners, and airbag modules. If there were built-in electronics to hide emissions violations, surely they would have been spotted.

Fiat is also having to get smarter in its ads, after it turned out that Chrysler video spots on saveur.tv were 98% hit by fraudulent robots rather and only 2% by human beings. Here is another area of rapid improvement.

A warning. This is a speculation mainly because we do not know the full terms of the spinoff by Fiat of 10% of its stake in Ferrari to finance its GM ambitions. FCAU is losing money. It depends on one very dynamic Italian manager, Signor Marchionne.Moreover, chartists warn that it is in a declining channel, which I think is mainly because it tracks F in Milan, which is traded in euros. Buy at under $13.

*Ecopetrol (EC) of Colombia should gain from the FARC deal which would end its pipelines being blown up. EC.

*Schlumberger (SLB) is walking away from the Eurasia Drilling acquisition after Russian delays on the required approvals. The existing MOU to buy a minority stake expires Sept. 30. SLB was under considerable pressure to drop the deal after a Malaysian Airlines flight from Amsterdam was shot down over the Ukraine by what most observers think was a Russian missile. SLB is Dutch Antillean.

*Cameco (CCJ) and Areva cut a radioactive red ribbon the previous week to mark the reopening of the Cigar Lake uranium mine and the McClean Lake mill in Saskatchewan, Canada. Cigar Lake actually was opened in March 2014 and YTD has produced 6.1 mn lbs of concentrated uranium, already in its target range for the whole year. By 2018 the underground mine, controlled by CCJ, is supposed to produce 18 mn lbs. All will be purified at McClean Lake, 70% controlled by ARVCF of France, which will not be fully operational until next year, so purification is using other facilities.

There really was nothing to celebrate. But, heck, you want to do something besides fast and pray on Yom Kippur.

Drugs

*After the holiday break it was not only Japanese shares which fell. TEVA was down over 2% on Thursday.

*Australian Benitech Biopharma CEO Dr Peter French spoke the previous week at a Boston (MA) gene therapy conference on the gene-silencing drug discovery firm's work on rare disease oculopharyngeal muscular dystrophy. This is a genetic disease caused by a late-onset deterioration of a mutant PABPN1 gene which affects about 1 person in 100,000 of European ancestry.

BNTB's approach is to silence the mutant PABPN1 gene and replace it with a normal copy. Gene silencing is done using DNA-directed RNA interference.

*Novartis's (NVS) deal 2 years ago to use Unilife delivery devices to deliver drugs into individual patient organs will be extended to other new drugs from NVS. NVS also is creating a 15-medication “access” fund to supply them to emerging markets at $1 per treatment per month. First up are Kenya, Ethiopia, and Vietnam which will be the first Novartis access recipients, but the plan is to offer these drugs in developing countries overall, including China.

*GlaxoSmithKline (GSK) and partner Theravance (THRX) plan a Japanese new drug application for their combo of Relva Ellipta for treating chronic obstructive pulmonary disease after a global phase III safety and efficacy trial.

GSK won European Union CHMP tentativeapproval for its Nucala (mepolizumab) to treat adults with severe eosinophilic asthma. It is delivered with a monthly injection of the monoclonal antibody which bids to interleukin 5, an inflammatory cytokine which boosts the number of white blood cells which trigger the asthma. The US FDA also approved it for sufferers aged over 17.

TEVA is developing a similar anti IL5 drug.

GSK is ahead of NVS in emerging markets where it is selling its malaria vaccine at a mere 5% markup from manufacturing costs.

*France gave Nokia permission to take over Alcatel Lucent on Wednesday. NOK rose 2.7% but fell over 1% on Thursday, on the NYSE along with the euro.

Fund Notes

*Investor of Sweden, a holding company, via its Patricia division, bought for an undisclosed sum BraunAbility, a family owned 50-yr-old US firm which builds wheelchair accessible vehicles and wheelchair lifts. This follows IVSBF's earlier buy of wheelchair-maker Permobil.

*JP Morgan China Region Fund is joining the SEC-induced trend toward majority voting in proxies rather than plurality votes. Next perhaps they will report net asset value weekly as other CEFs do.

Neiges d'antan

*Canadian Solar (CSIQ) at $71 (US) was rated buy by Stifel Nicolaus with a target price of $25. Canada for some reason is suffering in the wake of the interest rate cut in Norway (both export energy) and I would not buy any loony energy play now, particularly not one competing for China solar.

*Mellanox was rated buy by D.A. Davidson brokerage with a target price of $60 vs a current price of $40.75. Our writer Patty the Biotech Maven likes MLNX but I am not sure.