Busy Monday
In the 19th century,downstairs (the servants) used to complain if they were forced to dine on salmon the master had fished from the nearby rivers of Devonshire more than once a week. Salmon was cheap but boring and tasteless at least as prepared in the servants' hall.
I fear something similar will happen globally when the new super-sized frankenfish approved by the US Food & Drug Administration hit the market. The bigger fish (4x as long and about 10x as heavy) are created by CRISPR gene insertion. There will be more fish to satisfy the world's need for protein, but will it be appetizing?
The week of many close of month reports on global economies began with a big bite of bad-good news. The inflation rate in Italy fell by 0.5% in November after rising in October. In the world of today, central banks want there to be more inflation to prevent the dreaded fall into deflation. While US data are not yet out, the 2016 social security payments have been set at a level based on zero inflation too. The US consumer price index is flat to negative. The only places where you can see inflation is in asset prices, ranging from modern art to Manhattan or Cape Cod real estate.
One bit of good news on the financial regulatory area. It now appears that the eleven Eurozone countries planning a Tobin tax on financial transactions are too disunited to produce a program by the December 30 deadline set by the EU. The issue is which transactions are to be taxed: stocks, public or private sector bonds, currencies, options, futures, all of them, some of them? Austria's finance minister Hans Joerg Schelling, who has some other problems over the failure of the politically plugged-in State Bank of Carinthia, set the deadline a couple of years ago but the taxing countries are in disarray now, few more than FM Schelling.
*The Samarco iron ore mine partners, BHP and Vale face a mounting wall of fines and lawsuits over the tailing dam disaster of reais 7.2 bn to 20 bn (the larger figure is equal to US$5.2 bn). This is addition to an earlier fine of Rs 250 mn and well above the provisions the partners created so far to cover costs of $1 bn.
The ruptured dam killed 13 people and there are at least 7 further missing victims. But now VALE's director for human resources and environment, Vania Somavilla, has accepted the UN charges that the flooded Rio Doce is poisonous. This is not because of the tailings themselves, but because the volumes of water stirred up arsenic at the bottom of the river.
Vale CEO Murilo Ferreira has resigned as chairman of Brazil's Petrobras; he had already taken leave earlier over policy disputes. PBR is the focus of a huge and wide-reaching corruption investigation.
Meanwhile the price of iron ore,what Vale mines, has fallen below $40 per metric tonne in Singapore trading today. While Vale stock fell 7.6% in the pre-market it is now down only 4.8%. Your editor bought more before the disaster based on the likely end of the iron ore selloff but she got that wrong. She didn't anticipate a burst dam on the Rio Doce (not doce or sweet if it contains arsenic.)
*Teva fell 3.2% in the pre-market on news that it was raising up to 7.9575 bn with the issue of new ADRs and mandatory convertible preferred shares to pay for its takeover of the generics side of Activis plus Rimsa and any other deals or spending which may come up if the deals do not materialize. By now Teva fans have boosted the share to near $63. The capital raising will be less dilutive if the share is pricier.
Separately, TEVA and Japan's Takeda created a jv over the weekend to launch generics in Japan, which desperately needs to cut its healthcare budget. Teva, which will own 51% of the jv, has run into difficulties in Japan over both generics and copaxone launches and it bought out its prior Japanese partner, Kowa, which didn't failed to boost sales. Its wholly owned Japanese sub Teva Saeiaku 2 years ago arranged for Takeda to launch copaxone to treat multiple sclerosis.
Fear of dilution coupled with fear of EU special labels for goods from the occupied territories (and PM Benjamin Netanyahu's reaction) took down Tel Aviv shares today. TEVArecovered an now is only down 0.49% in US trading
*Third time lucky? Israeli website Globes Israel expects that Delek Group will win the needed approvals from regulators there to sell its Phoenix Insurance arm to Fosunof China for $1.8 bn. Two earlier sales, one to Donald Trump's daughter and her Jewish husband were vetoed. DGRLY needs the money to develop the offshore Leviathan gasfield.
*South Africa's Naspers, whose excellent results we reported on Friday (sales up 10% and profits up 45% Y/o/Y) has now revealed that it wants to raise up to $2.5 bn with new issues to take advantage of opportunities in internet companies. We know it wants to buy the remainder of Russian classified ad site Avito. This originally was pegged to cost $1.2 bn but has become cheaper since then as the ruble fell. NPSNY's capital raising will be advised by Citigroup and Morgan Stanley. cf Teva above.
*Bank of Nova Scotia reports before the opening tomorrow. It is expected to earn $1.44/sh in its Q4 on revenues of $6.3 bn.
*Bavarian Nordic shares rose 7.33% today on no news. It may just be that the marketmaker returned from his or her Thanksgiving break.
*On the salmon front we are selling another half of our Marine Harvest stock, the Norwegian operator of salmon fishfarms. MHG is a seemingly respectable offering from Norwegian wheeler-dealer Jan Fredriksen but we remain cautious. We will leave the remaining quarter of our shares to run some more. If that takes you to an odd lot just get out. I still own 1000 of this MHG shares tipped by Harry Geisel. But my husband, raised in Devon, told me about the servants rebelling about salmon again. Frediriksen sacked the executive who was alleged to have bribed the Uzbek president's daughter Gulnara Karimova, astonishing me. He was never considered an ethical paragon in the past. Gulnara's daddy has also barred her from the presidential palace. You never know!
Disclosure: None.