While the relief rally in France over Macron's lead continues, there is reason for caution. Leftist candidate Mélanchon is refusing to back the former Rothschild banker against Marine Le Pen, the anti-immigrant right-wing populist.

And once again, according to both Macron's En Marche movement and Japanese counter-espionage trackers, Vladimir Putin's pirates are trying to hack into the e-mail systems of a strong opponent of the Russian leader. The Kremlin's “APT 28” has made a half dozen phishing attempts against Macron's movement, similar to what hit the Democrats during the US election campaign. Like Donald Trump then, Ms Le Pen has been making noises about the need for better relations with Russia.

To give credit where it is due, it looks like Pres. Trump has won Beijing's leaders over to a tougher stance against North Korean nuclear ambitions. China now says it will not respond if the US makes a surgical military strike on North Korea.

By giving up on his crusade against the RMB's alleged “manipulation” downward, not backed by what the currency is in fact doing, Trump has gotten the Chinese to switch their stance on murderous juvenile dynast Kim Yong-un in North Korea. Now the US is setting up a missile defense system in South Korea which China is tacitly allowing. It is now moving toward the US despite its official alliance with Pyongyang.

Since there are 4 company quarterly reports to deal with today plus other important news, I will cease pontificating and start reporting in alphabetical order. We have lots of news also about our REITs, real estate investment trusts.

*BCE beat on earnings and (barely) on revenues, but its lower guidance on full-yr earnings took down the share price of the Canadian telco which also offers a full range of internet, cellular, and video (TV) services. Quarterly earnings at 87 loony cents were 4 cents ahead of the Capital IQ consensus while revenues, up 2.2% y/y beat barely, at C$5.38 bn vs consensus C$5.37 bn. It attributed the earnings rise to the build out of its Bell Mobility cellphone LTE network and higher rates. The network now covers 99% of Canada by population and 87% by area.

For the rest of the year while BCE upped its revenue forecast to a 4-6% increase vs an earlier one of 1-2%, it lowered its full year EPS forecast to C$3.30-3.40 from the earlier one ten loony cents higher.

BCE also raised its dividend by over 5% to C$.87 which already was paid for Q1 April 15, so it was not a surprise. Another negative was BCE warning against threats of new Ottawa and provincial regulations which might limit its profits and stressed that

It cited technological improvements which speed up transmission and wireless. This backed a steady increase in household signups for its internet and wireless and quad play options. It also cited small and medium businesses coming on board, but warned that there are competitive alternatives available. As a result BCE must continuously invest to improve its services. After opening down about 0.3% BCE is gaining traction but still lower than yesterday's close.

*Irish building materials firm CRH plc reported a 3% rise in like for like sales (excluding currency factors and M&A) in the quarter to March 31 and forecast higher H1 earnings from last year's euros 1.12 bn (now $1.2 bn) from online sales in European markets and greater demand in the Americas. Including acquisitions and currencies, sales rose 4%.

Over the full year, it expects that infrastructure will boost Americas sales, followed by non-residential. But residential construction may not return to long-term average levels. In Asia, because of increased exports from the Philippines, CRH expects lower sales.

Q1 sales last year were boosted by good weather in all its major markets but this year the winter was less mild.It will hold its AGM tomorrow in Dublin.

Cash flow in Q1, normally a down period, beat forecasts but not as handily as last year. As is normal in Ireland quarterly profits are not given in trading updates.

*GlaxoSmithKline beat with good sales growth in Q1 as anticipated because of currency factors. Q1 net income was up nearly fourfold to £1.05 bn vs prior year Q1's £282 mn, but of course the Brexit decline of sterling helped. Adjusted operating earnings leaving out one-time factors, rose 30% to £1.98 bn. Adjusted eps was 25 pence and diluted eps was 21.3 pence vs 5.8 pence a year ago. Dow-Jones figured that stripping out currency effect means operating profit was up 9% and revenue up 5%.

However you slice it, GSK sales were up in most sectors. Pharma rose 17% in sterling but only 4% at constant exchange rates.

The market reacted negatively because of disappointment over sales of new respiratory drugs expected to reaffirm GSK's franchise in this area when its Advair patents expire in the coming winter. Sales of Advair and Seritide were flat at £752 mn in sterling but down a huge 12% in constant exchange rates.

New CEO Emma Walmsley said GSK will focus its R&D on fewer product lines, which will better match market needs, something which also scared investors, fearing her marketing rather than research background. She announced that there will be a priority review with the next quarterly report.

Walmesley stressed that Glaxo wins from having three main lines, ethical drugs, vaccines, and OTC products, giving it alternatives for earning money. Consumer health (OTC product) sales up were 16% to £2 bn. Vaccine sales rose 31% to £1.15 bn notably thanks to its meningitis jab where growth was 71% in sterling and 51% at constant exchange rates. But the hepatitis jab sales rise was a one-off result from a competitor's production problems.

New product sales topped £1.4 bn, up 72% thanks to Triumeq, Tivicay, Relvar/Breo Ellipta, and its best US performer, Nucala, where sales grew 19%. Nucala is in phase III trials for further asthma and COPD indications. GSK also has high hopes for its Shingrex shingles vaccine.

But overall pharma line sales up only 4% at constant exchange rates fed analyst negativism. The US also was less than wild about GSK's veteran respiratory drugs, where growth lagged that of HIV and immuno-inflammation products.

Walmesley moreover warned that the future of the US drug market, where GSK sells most of its ethical drugs, is still uncertain because government policy can go either way. The US accounted for 11% of GSK sales rise in Q1 in constant exchange rates, and for 26% in sterling, and is by far the largest market for the UK company.

Another worry are the legal terms of the deal with Shionogi and Pfizer over ViiV Healthcare which give the partners the right to an IPO of ViiV or a buyout of their shares. This is covered by a put option to PFE and a call option over the Shinogi share. While GSK will not exercise its rights to blocking the reshuffle in 2027 or 2030 but it still faces this in 2032.

Notable pluses include emerging markets sales up 19% and GSK's lupus drug, Benlysta, an immuno-inflammation product, was a winner with Q1 sales up 40% to £91 mn. Its Cervarix (jab against cervical cancer) had £17 mn in sales despite political opposition.

For 2017 the company reiterated its expected profits of 80 pence this year. It expects sales by 2018 of £6 bn.

The dividend was not raised from 10 pence and there were no share buybacks. GSK closed down 2.1% in London where the average FTSE share was up 0.2%. More drug company news below.

Bancos

*Santander reported net profits up 14.3% in Q1 to euros 1.87 bn ($2.05 bn) which beat FactSet forecasts of euros 1.75 bn Fees were up 18.5% in the quarter to euros 2.84 bn while interest income beat at euros 8.4 bn, up 11%. Chair Ana Patricia Botin said that “while the environment continues to be changing, the outlook for Santander is positive. The economies of all our core markets are expected to grow this year. “ SAN also managed to boost its Basle III capital ratio to 10.66% from 10.55%, but it is still a low-capital banking giant for Europe. By year-end SAN wants this to top 11% and it is on track to do so.

SAN's best market was Brazil where net profit rose 77% y/y to euros 634 mn from higher lending and fees, despite higher taxes and provisions. It accounted for a quarter of earnings. Bloomberg's Macarena Montijano commented: “Patience has been rewarded.”

Latin America overall saw a 50% jump in profits and now accounts for half of the total for the group, fed also by Chile and Mexico. Britain, a market which used to be equally important to the Spanish bank, saw earnings decline 8.2% to euros 416 mn because of currency changes. In constant currency they would have risen by 3%. US profits in Q1 rose 16% thanks to risk controls and work on compliance.

Homeland Spain produced an 18% rise in Q1 profits thanks to higher fees and lower provisions from a depressed base and its innovative 1-2-3 account which helped improve margins. It accounts for about 15% of profits. SAN is expected to offer to buy Unicaja Banca and be active in other restructuring moves there.

Europe's largest bank by capital is up by 21% YTD in euros. SAN forecast a return on tangible equity of over 11% by next year and eps to grow in double digits by then. In Madrid trading SAN fell 0.4% and Wall Street was more negative.

*Bank of Nova Scotia was tipped by Canadian blog Dailybuyselladvisor.com today because its stock underperformed the other 4 major banks which are heavily into the USA, whereas it is a major player in Latin America where growth is faster. While the other 4 are up 20% YTD BNS is only up 10% and moreover its results lagged those of the others. It made a sales gain in the quarter to Jan. 31 of only 10% in C$, to $2 bn Profits rose 12.1% to C$981 mn or $1.58/sh. It won because of higher banking margins but also for its special sauce, wealth management, and cost cutting, which included sale of unneeded real estate holdings. The advisory says Scotiabank will earn $6.42/sh in the current FY to Oct 31 and is at a 12.3 p/e ratio. It also says the yield is ~4%.

More Drugs

*CFO Eyal Dayesh is leaving Teva, as I wrote yesterday but he will conduct the Q1 results calls, and will not leave until then for his new credit card CEO job. A head hunter has been hired in Israel. TEVA is up 2.7% today. I bought more yesterday at $30.806 on the argument that you Neva sell Teva. It promptly fell another 0.463 cents by the close. They don't ring a bell at the bottom. TEVA also fell because Novartis reported that its Sandoz generics arm suffered an 8% price erosion in Q1. Teva is a bigger player.

*Thanks to Kiplinger's, here is another reason to prefer Roche to its Swiss rival NVS. RHHBY did not buy a generics company, but jumped on Genentech, a developer of monoclonal antibodies used in immunotherapy: Avastin (for colon and lung cancers); Rituxan (for blood cancers); and Herceptin (for certain breast cancers.) About 60% of Roche sales are for cancer treatment. Antibodies destroy malignant cells or stop them growing. Others prime the immune system to recognize malignant cells despite their camouflage. This is a key business but note that Avastin will lose its patent protection by 2019 in the US, and 3 years later in the EU.

To prepare for this Roche has about 90 experimental cancer drugs in its pipeline. A likely winner is Perjeta which will come out this year as a breast cancer post-surgery treatment, and Tencent is against lung cancer.

Another boost for RHHBY cited is that it bought a controlling stake in Foundation Medicine, a company which performs expensive tests on cancer tissues to find genetic anomalies which doctors can target with antibodies. Now the tests have to be sold at a loss because a full range costs about $7000 per patient.FMI tests also can help drug firms direct their research to treat genetic flaws which lead to cancer. While FMI is listed, it is a money loser startup despite $117 mn in revenues last year. It lost nearly every dollar in sales,$113 mn, or $3.25/sh. Roche owns 61% of Foundation.

*Bavarian Nordic rose 5.76% today to a 12-mo high of $17.98. BAVA or BVNRY is Danish and may be is being boosted by Novo Nordisk rising about 0.95% today.

*Galapagos NV announced a new study of its filgotinib in cutaneous lupus erythematosus where it will have to compete with GSK. The phase II trial is being run in cooperation with Gilead which is working with GLPG in a host of other inflammatory diseases: phase II for Sjoergren's syndrome, akylosing spondylitis, and psoriatic arthritis, and phase II for Crohn's disease and ulcerative colitis. We sold because our former Italy drug maven retired from the Belgian firm.

*Good grief. I did not deal in pot when it was illegal and a highly profitable business. I was just an occasional customer. It seems to me that the readers reacting with shock-horror still believe that marijuana is an entryway for hard drugs, not the case.

Feeding Frenzy

*In UK trading, Greencore recovered by 5.2 pence or 2.3% today. I also bought more GNCGY.

*Mexichem is recovering, at $5.31 bid, $5.78 ask. MXCHF was left behind earlier this week but the other Mexicans are down or flat (like bread-maker Grupo Bimbo).

Technology

*Vonetize of Israel (VNTZ in Tel Aviv; there is no ADR) is negotiating to distribute its SmartNet infrastructure and internet distribution services its to African internet content providers starting with ChrystalWeb in South Africa which signed a deal yesterday worth nearly $1 mn with the smallcap. It is also in talks with Vodafone for operations in Zambia and, via its listed Vodacom South Africa sub, in the Congo Republic.

*SAP EG of Germany was downrated to a sell by Stifel Nicklaus from a hold, with a $102 target price. We told you first.

Funds and REITs

*Fibra Uno fell 2,.63% today in Mexican trading. I also averaged down on FBASF, as usual too soon. It holds its annual general meeting mañana in Mexico City.

*Kennedy Wilson Europe Real Estate plc finally got around to telling shareholders (rather than the institutional investors among them) about its plans. KWERF will be taken over by its US parent, Kennedy Wilson Holdings, KW, in a deal which the interrelated management had no trouble agreeing up. This will crate a global REIT with $8.2 bn under management. Each shareholder in KWERF like us weill get 0.667b new shares of KW based on the $22.5 price of KW on April 21 and the then exchange rate, a 20% premium. We will also get to own 36% or so of the new entity. A fatter KW will be more heavily weighted in passive stock indexes and have more liquidity. Costs will also be lower for management of the combo. The management of KWERF, poor dears, will wind up with 13% of the combined funds.

KW also promises to increase our dividend by 12% for Q1 when the deal closes subject to approvals by the Jersey Companies Law. That is Jersey the Channel Island, not New Jersey, not the home of Bruce Springsteen.

*Another REIT, Ascendas India Trust, made a new high yesterday at 81 cents. ACNDF is Singapore based and a favorite of NRIs (Non-Resident Indians).

*Bonus stock Global Self Storage, a REIT, formerly Global Income Fund, GIFD, now invests in storage facility in the US and is growing fastest in the heartland. SELF-Q pays a flat 6.5 cents quarterly dividend since its conversion at the start of 2015 and its relisting early last year. The former and current companies are controlled by the Winmill family of NYC with 30.6% of the stock including the holdings of Tuxis of Clinton (CT) which were sold to SELF last Dec. 30. It issued a right to buy new shares 1:1 early last year which I accepted. It does not now earn its dividend but the stock is buoyant.

The big issue with storage REITs is that leasers may walk away if rents grow too high for what they stash. And in fact SELF same-store leases fell by 3% in 2016 as same-store rentals rose by 10.7% and overall costs of operations rose 12%. Moreover SG&A rose a whopping 18% last year because of legal and accounting fees related to the Tuxis deal, promotion on the internet and via digital marketing, 24/7 kiosk availability and other improved customer service. They will continue up because of increased reporting and regulatory requirements. One off included high snow removal costs.

While 2016 revenues rose 40.1% over prior year, cost of operations rose 45.9% and occupancy per available square foot fell 1.9% by the close of the year. It earned only 4 cents per common share last year vs 10 cents the year before. I think it is time to sell.

*In addition to its share buyback plans, Pershing Square Holdings, PSHZF also plans to seek a full London Stock Exchange listing while keeping in place also its Euronext listing in Amsterdam. We may have sold the fund managed by Bill Ackman too soon.