There is a glut of world maritime vessels, overbuilt earlier in the century on the expectation that dry bulk demand would grow 3-4% per year—which didn't happen. The new protectionism in the US under Trump, and retaliation by other countries will reduce the volume of trade shipped around the world. The Panama Canal is wider so it needs fewer ships to cross it. South Korea's shipyards and shipping firms are lining up to file for bankruptcy after STX and Hanjin Shipping sank earlier this year.

Our former holding in the sector, Dry Ships, is run by the gorgeous Greek playboy George Economou who is in debt up to his blond thatch. DRYS is a shipwreck, selling off its fleet to repay creditors under a complex restructuring forced on Gorgeous George. Yet, to my amazement, the share we sold way back when is up 1500% in 5 days.

It is not alone, with other mostly Greek bulk shippers up also—but only in double digits. This is a classic stock bubble to avoid.

Meanwhile, a staid and respectable dry bulk shipper, A.P. Moeller-Maersk of Denmark, which we also once owned has seen its share price hover between DKK 7500 (during the selloff early this year) to12,000 earlier this month. Yesterday was at DKK 9015. Unlike the Greek upstarts, this company is ancient and a force in the global constellation. Its stock rose when it announced a plan to split its oil and transport businesses, the latter including tankers, container ships, terminals, and bulk carriers. Oil would be engaged in drilling for the stuff and vessels to supply offshore drillers.

The Maersk boomlet reversed when Maerk revealed that it might consider buying South Korean shippers like Hanjin—or Hyundai Merchant Marine, which is like the Greeks because it is being forced by its creditors to restructure. Danes don't like Asian upstarts either.

But the Maersk move on Korean shippers and shipbuilders was what triggered the rise in the stocks of other listed bulk carriers so far not yet in official bankruptcy.

Back when we owned these stocks, we would check on the Baltic Dry Index, a tracker of prices for bulk carriers. It has gone up from about 800 last month to 1084 yesterday and has nearly doubled year-to-date.

As for DRYS, the daily suspension probably indicate a short squeeze, but I am only guessing. Its trading gets suspended by Nasdaq almost every day.

My verdict on the sector is to sail in other waters. Some other shipping sectors are doing better on the prospect of more liquefied natural gas shipping (among other things because there will be more drill, baby, drill in the USA, resulting in a surplus). The obverse of the coin is that oil tanker companies are doing more poorly because their commodity faces more competition. This is not a certainty, as there are daily ructions up and down in the stock market over the variations in the price of oil.

My internet connectivity remains dodgy despite the cable company making repairs yesterday evening in my neighborhood, after storms and stresses on the system from a locally-based future US president

More on oil, drugs, social media, and a few other sectors follows including two conference calls.

*Tencent Holdings (TCTZF) of Hong Kong yesterday, fell 1.6% here after it reported on Q3. The numbers were okay but below analyst forecasts which had gotten beyond reality. Revenues rose 52% y/y to RMB 40.388 bn, or $6.048 bn, on which operating profits came in at RMB 14.46 bn or $2.165 mn, up 40% y/y. Its net rose 42% to RMN 10.776 bn or $1.614 mn.

Here are some reasons for the share drop. Net margins this year were 36% vs 39% in Q3 2015. Basic eps was RMB 1.134 and diluted 1.121 to exclude its share-based compensation and its bonus distribution to its employees to celebrate its 18^th birthday. Share-based compensation (to the brass as well) rose 45 % in Q3 this year go RMB 4.964 bn or $8.95 bn. China is a Communist country and Hong Kong is governed from China, lest we forget.

TCTZF also stressed new security for its Connection strategy covering users, including a blockage system against fraudulent or harassing calls and text messages, for its business partners from its Android and Apple applications and modules to protect the from viruses and fraud, and of course also for its own site safety.

Its sub-Keen Security also discovered a security flaw in Internet-enabled autos from Tesla and shared its findings with the firm. Tencent's market share in Chinese security exceeds 30% (private sector only is counted.) The security scans of course also serve the Chinese political power and most phones sold there are pre-equiped with security applications which also allow government monitoring. This is the price of doing business in China. For the record, its system protects ID, passwords, personal data, and virtual property (game gizmo's). It scans mobiles to block viruses and enable them to work with lower memory needs.

CEO Ma Huateng AKA Pony Ma claimed that TCTZF delivered “strong financial performance: and “above industry revenue growth” plus “healthy margins”. He cited progress in online payment and cloud-based services as marks of progress.” He also indicated that stock grants begun this year will continue. The key revenue drivers were value added services at RMB 27.975 bn, online ads which rose 51% y/y to RMB 7.449 bn or $1.1 bn, and, from a lower base, other business revenues up 348% to RMB 4.964 bn.

However, the monthly active user accounts of QQ was negligible y/y and that of Qzone asocial actually fell.

The only good growth reported was for Weixin and WeChat, the social phone apps where Tencent gained from offering Rio Olympics coverage, a one-off. Here Tencent beta tested new mini Weixin programs which will provide native app-like experiences without leaving the interface at all. It also tested a free-day come-on to lure in new users—winning 700,000. (That huge number is the other side of being in China.)

It also reported a 1/3 rise in 9 mo sales over the 9 mos in 2015 to RMB 138.5 bn. It operating cash flow rose by18% to RNM 63.71 bn and debt barely budged.

Tencent stressed that it is successfully transitioning its social platforms from the PC to mobile and smartphones: QQ and its variants, Weixin, and WeChat. This has made TCTZY the number one in China for online gaming, music, books. Video, social media, and news. It also is first or second in the related applications like browsers, security, and selling stuff for itself or for merchants, and getting paid for this via mobile banking. Being big and broad boosts its stickiness, traffic, and ads cut across multiple devices. It is adding new functions like Leju real estate, health checks, transport, movie tickets, food delivery, and other goods. It collects payment for service subscriptions or for transactions. What all this goes to prove is that the original gaming business and the add-ons for serious players have grown long in tooth and the kids of 2008 whom I watched playing on PCs have all grown older and smarter. Meanwhile there are other temptations for current teens.

Separately Tencent and Qualcomm (maker of Snapdragon 800) plan to work together on virtual reality for smart phones for gaming and entertainment, via an innovation center, but few details were announced.

Tencent also has an ADR traded as TCEHY. But we own the original because we bought before the ADR was issued and they never offered us a free conversion because we are not Chinese or employees. More Internet news below.

Raw Materials

*BP plc (BP) which has cut its downstream costs for refining and sell petroleum products under the impact of the Deepwater Horizon disaster in 2010, is well-placed to benefit from the hovering oil price applying. The UK oil major is well-placed to benefit from the disarray in oil pricing likely over the next few months as Russia and the Opec cartel attempt to cut output. While Brent crude, the world benchmark, is up, US benchmark West Texas Intermediate is down, because of new shale and tight oil finds. BP is almost unique in having supplies from Opec, Russia, and the USA east and west to feed its refineries and downstream at the lowest price, plus the ability to ship worldwide.

UK chartists investorintelligence.com with which we exchange ideas upgraded BP to a buy based on its charts. And because it needs to get winners whose sterling earnings are boosted by foreign currencies. BP is down about 1.2% here.

*Ecopetrol (EC) dropped 2% a day after reporting. EC should also gain from the Brent-WTI gap.

*Also likely to gain is Schlumberger Ltd (SLB) of the Dutch Antilles which has been upgraded yesterday to buy from hold by Jefferies. But SLB is not a slam-dunk as it was cut to outperform from buy by CLSA earlier this week.

*Bonus stock Ormat (ORA) of Israel which develops geothermal power sites and utility battery systems to store solar or wind power was penalized for the latter and because it went ex-div yesterday.

*Orocobre (OROCF) of Australia is on a roll, up 4.7% on nothing I can find and over $3. It produces lithium in Argentina and was a Frida Ghitis pick.

Drugs

*One of my oldest subscribers (by age and by loyalty) phoned this morning to ask what to do about Teva (TEVA), whose quarterly report I wrote about yesterday. The naysayers include Leerink which cut its price target to $43 from $67; Morgan Stanley and Jefferies which cut TEVA's rating to hold from overweight and buy respectively. MS says Teva should have cut its 2017 forecasts for growth but since Teva didn't do it, MS cut revenue forecasts by 2% to $24.6 bn and its target price by a third to $41.

But Maxim Group, a drug analysis house rates Teva a buy at $52 and Royal Bank of Canada rates it outperform at $51 as does GARP investor Jonathan Wheeler at www.seekingalpha.com. Deutsche Bank reiterated Teva as a buy at $54.

So I decided to go over my notes from the conference call yesterday to see which way I would advise PH to swing. Of course much depends on his tax position about which I know nothing.

In the conference call, Eyal Vigodman, CEO explained why the results were poor in Q3, naturally also trying to justify his management. In Q3 the US Food & Drug Administration approved only 11 new drugs, 3 0r 4 fewer Teva new drugs than the Israeli firm had expected. He did not promise that they would hit the market in Q4, but the odds are that they will. He also carefully avoided any cut in 2017 forecasts. Here's why.

Teva has applied for 300 FDA approvals, and accounts for 8% of all applications, the Teva chief exec argued. He expects that some 60 of them will be approved in 2017. That is the offer.

Meanwhile special factors hurt sales in Q3 this year like new generic competition on best sellers like Pulmidort, Nexium, and Avipiprazol. These will continue but meanwhile there will be new drugs from Teva.

Another factor hurting sales seems to have been deliberate or self-inflicted. Vigodman is forcing Teva to focus its R&D on key molecules, and on finding new uses for ones it already owns. This means others are being terminated—one reason the former general is so unpopular in Teva labs and among some analysts.

Teva needs $500-600 mn in new product sales every year to keep up its profits. It probably will get there this year—but barely.

He stressed some coming new drugs Teva is getting closer to marketing, among them SD-809 against Huntington's disease which the US FDA will issue a ruling on next April (its chief scientist is a specialist in this genetic disease which killed Woody Guthrie.) The same drug will also have an FDA application this year for treating tardive dyskinesia after completing key phase 3 trials. It also has made a deal with Regeneron to develop methods to treat chronic pain with fasinumab, a potential blockbuster because it is non-addictive. It also signed an exclusive partnership in biosimilars withCelltrion.

Teva gained 1.3 % yesterday. Maybe my oldster should buy more. Because my acquisition cost is so minimal I almost never sell Teva because I hate paying taxes. I bought the year after this newsletter was founded as a print product based on a tip from an analyst I knew from Paris who worked for Swiss Cie Financière Edmond de Rothschild.

*GlaxoSmithKline (GSK) reported good results with two drugs at the American Rheumatology Conference. Sirukumab is an anti-interleukin-6 for treating rheumatoid arthritis in phase 3 trials in adults who cannot take anti-tumor necrosis treatments. Benlysta treats systemic lupus and was subject of a 7-yr follow-up.

Nafta stocks

*Alimentation Couche-Tard (ANCUF) reported that CST Brands shareholders have approved the merger agreement with ANCUF's US sub.

*As anticipated Mexichem (MXCHF) which I averaged down on was up a bit yesterday, at $4.44.

IT

*We are pondering selling our Gemalto (GTOMY) which is down by a third from our paid price but not until we find another way to play the sector better than GTOMY. Our reporters are working on this I hope, but they have to coordinate.

*Nokia (NOK) is accused of aiming for capacity rather than capability with its takeover of Alcatel-Lucent (ALALF) and the seekingalpha.com anonymous writer expects the NOK stock to remain “under pressure”. He accuses NOK of choosing Windows phones over Android or iPhone. Actually, NOK is exiting phone production entirely except to cash in on its patent chips and is now in the business of supplying exchanges, the main reason it took over ALU. The NOK share took on 2.6% more in European trading yesterday while most Euro markets were down.

Bancos

*Reeling again is Royal Bank of Scotland (RBS) facing a US$12 bn pound fine over its misselling mortgages to Americans, under investigation by our Dept of Justice. The worse the common the better the odds are that the preferreds we own will continue to pay out handsome dividends in dollars. We own two RBS prefs and one from NatWest which it acquired before the global financial crisis. It is not dancing a Scottish reel.

*Banco Santander (SAN) is buying back from Warburg Pincus and General Atlantic the half of asset management unit it sold to them in April 2013 for euros 2 bn. The price it will pay was not revealed. The Spanish bank is seeking more fee income and jv has euros 170 bn under management.

Funds

*The NY Times biz section did a report on William Ackman's two year's of double-digit losses after topping the charts. It cited the long on Valeant rather than the short of Herbalife as causing his woes, which is familiar to this shareholder in Pershing Square Holdings (PSHZF) closed-end fund we bought in London. Now he has piled into Chipotle Mexican Grill which may stop poisoning diners. Privium, an Amsterdam fund of activist funds, bought into PSHZF, my local newspaper revealed, and its director Mark Baak said of Ackman “he didn't become stupid overnight.” PSH gained 0.12% yesterday because it barely trades in Nieuw Amsterdam.

*Another guru to some, George Soros, sold his shares of SPDR Gold, GLD, an ETF, as reported to the SEC yesterday.

*Eduardo Garcia writes that Fibra Uno (FBASF) was upgraded to a hold from a sell by Signum Research on valuation grounds. Eduardo edits sentidocomun.com.mx with which we trade. My reason for more FBASF are that it is betting the farm on continued Mexican development by building and buying retail and mall sites, factories, hotels, schools, and offices. Most of the borrowing and the rents are paid in dollars, which helps our risk. And FBASF is the go-to landlord for modern Mexico and foreign investors there, not all of whom are gringos.