A factoid for today: British author Andrea Wulf, in her book Founding Gardeners,reveals that Ben Franklin was responsible for exporting Scottish seeds so kale could be grown in America. Not just Poor Richard's Almanac, the lightening rod and the Franklin stove, but also kale! The Environmental Protection Agency is under frequent attack by a publisher of something called Poor Richard's.

Actually, Ben Franklin would have like the Pope's environmental encyclical of today against climate change, since the Franklin stove burns wood very efficiently and helps prevent global warming. We have to save God's creation for our children and their children, said the (I think) childless Holy Father who worked as a chemist before becoming a priest.

Pope Francis's global warming encyclical says “the earth, our home, is beginning to look more and more like an immense pile of filth.”

To overcome that, he added: “Nobody is suggesting a return to the Stone Age, bu we do need to slow down and look at reality in a different way, to appropriate the positive and sustainable progress which has been made, but also to recover the values and the great goals swept away by our unrestrained delusions of grandeur.”

Despite having been raised by a consummate diplomat, George H. W. Bush, Jeb Bush, the most prominent Catholic convert in the Republican field, has just put his foot in his mouth, telling Pope Francis to focus on ethics and leave the politicking to pols.

The European Community will hold a meeting of 11 countries to try to determine which transactions will be taxed by which entities to bring on a Financial Transaction Tax, AKA a Tobin tax. The cat comes back.

This is one of the key measures up with which Britain will not put if it is to remain in the European Union.

My newsletter was approached to place an ad for bit gold, which uses gold to make payments, a sort of yellow-metal paypal alternative to bitcoin. I opted not to sign up, despite the charm of the concept, mainly because we already have a gold-linked advertiser, www.bullionvault.com, and I don't want to become type cast as a gold bug. Bitgold's soaring stock trades in Vancouver as V-XAU, another reason I hesitated, as they proposed to pay me in Bitgold if any of you signed up to buy gold or pay my subscription fees in precious metal. It is promoted by Stockhouse which is another factor.

Today we have news from Finland, Holland, Taiwan, Hong Kong, Israel, China, Brazil, Colombia, Britain, Belgium, Australia, Germany, and a few other places.

Down Under and Far East News

*T​he​ Financial Times has a complex analysis by commodities editor Neil Hume who says he is “simply” explaining why iron ore prices have risen about 30% since April, to ~$65/metric tonne.

Hume cites analysis that despite weak demand, Chinese steelmakers went on a late buying spree to replenish their stocks. What with tight credit and an uncertain outlook for demand, “they waited until the last moment” to restock for the summer.

That in turn triggered low inventories at Australian mines and export ports. So when the orders suddenly picked up Chinese hedge funds (who knew China has hedge funds?) had to scramble to cover their short positions in derivatives on iron ore. This supported iron ore price levels.

However supplies are now likely to increase as exports pick up, just in time for steel production in China to drop for the winter. Moreover new Australian mines are coming on stream. So the current price level will not stick perhaps creating new problems for companies like Vale.

On the other hand, in London trading after everyone had read the FT Vale rose over 2.5%.

*A factor which Mr Hume did not cite, discussed in our Aberdeen Asia-Pacific Income Fund quarterly report, may also have had a role: the sinking A$ against our US one. The Reserve Bank of Australia, their CB, kept revising downward its exchange-rate target for the level at which its impact on the domestic economy would balance, as the Aussie fell and fell some more last year. Despite falling commodity prices and moderating Chinese growth, the A$ stayed up above the CB's comfort zone. So it chopped interest rates some more to push down the currency. That gave its competitors an edge against VALE, which despite producing its iron ore more cheaply in Brazil, also has to repay its debt denominated in US$s. FAX predicts that “US dollar tailwinds are likely to prevail for longr as monetary policing settings between the two nations diverge.” More cheap A$s is what FAX expects.

With further risks of A$ weakness, this sounds like an argument for lowering our stakes in Vale which could have trouble competing with Rio Tinto or BHP or the new Hancock Prospecting iron ore exports from Oz. The counter-argument is first that Carajas ore is being mined more cheaply by Brazilians than any iron can be extracted in Australia, and its shipment by rail to ports and thence by Valemax carriers is now being funded not by Vale but by its investor partners.

Also, VALE was early in selling off other assets including mine projects in Africa and non-ferrous mines in Canada, helping to ease the impact of the strong dollar on its debt. This is something Brazilian companies know how to do from past experience.

Finally, Vale can call upon special support from Brasilia as a national champion, so cheap money from BNDES is available if required. Cf fundnotes below.

*More from the Far East. WeChat Taiwanese operations may be shut down because they violate limits on Chinese investment investment in Taiwan. WeChat is an Internet site owned by Tencent, TCTZF. There is reason for hope, however. Other supposed violators of controls on Internet operations by Chinese companies like Alibaba and phone firm Xiaomi managed to continue to offer services in Taiwan despite being banned, from Chinese language publications translated by a new Taiwan source.

Drug Deals

*Anonymous contributor “PLM” (also a former French railway from Paris to the Riviera whose posters are hot) wrote at length in Seekingalpha.com about Novo Nordisk facing a challenge it deciding whether or not to proceed with phase 3 trials of an oral GLP-1 (semaglutide) agonist developed with Emisphere Technologies of Tarrytown NY. The phase 2 trials were reportedly a success, and EMIS backers have been demanding more information at NVO investor events without success. NVO will answer yes or no August 6 at its half-year strategy meeting, and meanwhile the EMIS speculations will have to .. tarry. What the Danish firm has to decide is whether the oral formulation work safely and how much will it cost to move to commercial production and commercialization of this oral diabetes pill. PLM is an EMIS booster who is drooling over the future royalties it can collect if Novo proceeds to phase 3 in Tarrytown.

*Teva now has gobbled up 4.6% of the outstanding shares of Mylan which will give it “standing” under Dutch law to call for a shareholders' vote on a takeover bid. MYL had no idea what it was getting into with its tax inversion last year. MYL's riposte it to do a latecomer file for a generic of Copaxone, TEVA's blockbuster for multiple sclerosis, which is about to lose patent protection after a US Federal Court ruling. The US Supreme Court sent the TEVA case back to the US court of appeals telling it to show more respect for Teva's rights than it had in an earlier invalidation. Now the court of appeals has again called the patent invalid.

Meanwhile Teva has been converting patients to a new longer-lasting version of the drug injected ony 3x/wk which still is patented. Copaxone had $3.1 bn of sales per year at its peak. Novartis (via sub Sandoz) with Momenta were deemed first-to-file and if the ruling holds and the patent expires Sept 1, they and not Mylan will begin to sell generic Copaxone when the patent ends. So this is PR. MYL CEO Heather Bresch said the Appeals Court ruling “underscores concerns with Teva's ongoing financial prospects.”

However MYL is not sure it will beat back the Israeli challenge and is trying to take over Perrigo to slash its cash horde, not so far welcomed.

Teva has announced a partnership with Microchips Biotech to use the private firm's microchip drug delivery system for Teva drugs.

Its investigational monthly-injected drug to prevent migraines, TEV-48125, a monoclonal antibody against calcitonin gene-related peptide (CGRP) in phase 2b trials substantially reduced the headaches in sufferers compared to placebo. Patients in both groups were also allowed to take other migraine and headache meds in stable doses. TEV-48125 produced statistically significant improvements, drops of over 50% in migraine days for 53% and 59% of those respectively injected with 225 mg and 675 mg of the drug. Results will be presented at the American Headache Society annual meeting which begins today in Washington, DC. CGRP is also implicated in joint and heart diseases.

*The rumor mill having calmed down, shares of GlaxoSmithKline fell back nearly 4% in British trading today. It may start up again. GSK is considered a takeover target. Today FiercePharma interviewed Axel Hoos who head the GSK immuno-oncology research team who told the newsletter than it has 185 cancer drugs in development after its latest review, in key areas immuno oncology and epigenetics, aiming for a blockbuster way to fight cancer. Note that Novartis gets first refusal rights to new drugs GSK chooses not to develop in house, after which it can peddle them to another drug firm.

*Novartis meanwhile aims to boost its margins to over 30% of sales from 26% before it traded assets with GSK and get ride of its animal health and OTC drug businesses. It is now combining sales forces in oncology drugs in 22 countries and also at its house generics operation, Sandoz. It told newsletter FiercePharma that its Diovan is losing markets to generics and warned that new blockbusters may take time to grow: Cosentyx for psoriasis; Entresto against heart failure, and its first biosimilar Zarxio, a clone of Amgen's Neupogen to fight infections in patients with low white cell count because of chemotherapy (where Teva is also present.) The Israeli firm is also likely to suffer from Sandoz's first-to-file FDA designation as the generic maker of Copaxone.

*Finally a new item involving only one single drug firm. Galapagos of Belgium has completed recruitment of inflammatory bowel disease patients for its phase 2 trial of GLPG 1205, an inhibitor of over-expressed G-protein-coupled receptor 84, an antibody. The novel treatment is in proof of concept trials for ulcerative colitis after showing good result in phase 1. Recruitment began in Jan. and 60 patients were signed up in Belgium (HQ for GLPG), Czech Republic, Germany, Hungary, Poland, and Russia. The disease starts at age 25-35, goes on through their lives, and is currently treated with anti-inflammatory steroids and immunosuppressive  agents. About a quarter of patients have to have part of their bowels removed because the inflammation persists. About 200-250 cases arise in every cohort of 100,000 people, among whom is my second-cousin Stephen R.

Other Sectors

*Nokia wants to sell its HERE location sub, which is HQ'd in Germany, to German upmarket car-makers BMW, Daimler, and Audi, for about $4 bn. To get to that price, the auto firms want to bring on Baidu search engine (which earlier reportedly offered $3 bn), and a private equity firm, General Atlantic. The wrath of Microsoft by flogging HERE to a software firm is being avoided.

​Wednesday MSFT essentially lopped off the future career of Stephen Elop, the former CEO of NOK who successfully sold NOK's cellphone arm to Microsoft, which he then rejoined to help it integrate cellphones, not with success.

*Delek Group and its operator partner, Noble Energy, which own 85% of the future Leviathan gas bonanza offshore Israel, will not have until 2020 to start production and pay royalties to the Jewish State. The delay resulted from antitrust initiatives by the government which is worried about monopolistic pricing.

*I lowered my stake in Ecopetrol after oil prices rose on commodity markets. However EC failed to live up to expectations mainly because a new FARC attack took down the 150-mi Cano-Limon pipeline yet again, creating a spill hitting two rivers. We bought EC as a play on peace talks with the lefty rebels who have been at it for 60 years.

*Barclays analysts rate Renishaw an overweight with a target price of GBX 2825. It is currently 2355, one reason I am demanding that it port over to my new Interactive Brokers acct. RSW has a totally inactive ADR which is all I can access for now with E-trade.

*Gemalto paid its dividend to US reader TG at 21.7c/sh with a 15% Dutch withholding tax. GTOMY is an ADR and in theory it pays gross. You can offset the tax you paid against other dividends you receive. I fear that the 15% was fees charged by the Depositary Trust Co.

*One of my shrewder moves was selling China Minsheng Bank, which we bought because it was a private sector institution in a world of state-backed banks, also the reason we sold it in 2013 at a loss. With Shanghai shares soaring to 50% rise YTD, Mincheng is the exception, off 7%.

Fundnotes

*Despite its history, Aberdeen Asia Pacific Income Fund, FAX is not a sell. Having begin life as First Australia Prime Income Fund, these days it is substantially underweight in A$ bonds and moreover has been hit by a selloff related to its Australian heritage. The shares have lost abut 14% YTD, in line with the A$.

*Now that e-trade will not sell in London, and the market-maker offers a bid-ask price for my Africa Opportunity Fund ADRs (AROFF) that you can drive a truck through, despite the fact that the London shares quote in US dollars, so there is minimal risk. So I am pleased that the idea of a fund to invest $1 bn in Black Africa is being launched by TPG, a private equity shop backed by Sudanese billionaire-reformer Mo Ibrahim, who owns Satya Capital. TPG has $70 bn under management, a substantially larger cash pile than Ghanaian analyst Francis Daniels and Boston investment mgr Robert Knapp of Ironside Partners LLC can rustle up. Mr. Daniels suffered from the unexpected impact of Ebola on his investments and the plummeting Ghanaian cedi, but also for having invented a way to create a synthetic media stock, by buying Naspers and shorting its 34% holding, Tencent. We own both.

*Mr Knapp is also a leader in attacking Pimco Dynamic Credit Income Fund, PCI, which we just bought, claiming its alleged under-performance may result from the managers being paid regardless of whether they make money for shareholders. This is not the more global Pimco fund we just bought into, Pimco Dynamic Income, PDI, where the insiders have been buying.

*Since I keep preaching that investors should take a stake in ProShares Ultra VIX short term futures ETF, or UVXY which is a way to buy US stock market volatility, I thought I had best explain how it avoids contango, the way a future pride of something is higher than the current one. You run into it a lot in commodities, and a double weighted ETF owning volatility is subject to contango too. The value of your investment is fixed but the number of shares you own is cut via a reverse split every couple of months if there is no market panic (as there has not been since I began this strategy.) Of course I am sure there will be one eventually, why I keep my UVXY as the number of shares I own goes down and their value goes up. You get a cash payout for shares that are not a multiple of the split level.

The last split took place May 9 at 5:1 after the UVXY price got to $9. This was 16 months after the prior split (when I did not own the stock.)

UVXY aims to achieve double the movement of the S&P 500 VCI short-term futures index. I like the idea of an ETF to avoid expirations on direct positions on the VIX. I like the fact that its price is usually higher than its NAV. While this is an ETF its price tends to head for a premium as soon as the market exhibits weakness.

But I don't like the fact that splits reduce my effective return because compounding doesn't happen and I get dribs and drabs of cash which it will be hellish to account for in my taxes. The original shares issued in 2011 have now split 40:1.