The outcome of the Singapore summit could not have been predicted. The way Judge Richard Leon would rule on the AT&T merger with Time Warner was too hard to call. But I am pretty certain that the Federal Reserve will raise interest rates again and again and again, because of the 2.8% annualized rise in the May consumer price index reported yesterday—well above the Fed's long-term 2% target for inflation.

On Wednesday, the May Producer Price Inflation number was even worse, up 0.5%, mostly from higher priced goods.

The American economy is booming thanks to last year's tax cuts. Unemployment is at an 18-year low of 3.8%. Finding Americans to hire will also boost inflationary trends. Moreover, the prospect of new tariffs on imported goods from NAFTA countries Canada and Mexico, the European Union, and Japan, will also be inflationary. So the Fed has to raise rates.

This will hurt bond-owners who will gain in yields but lose on the principal they paid in the first place. Many emerging markets will suffer because they loaded up on cheap dollar debt; higher interest rates will increase the amount of local currency they will have to find to pay it.

These are my macro concerns right now. But before discussing how you should act over my macroeconomic predictions, I want to include a few notes about beer.

The opening of the (soccer) World Club will increase demand for brew, because fans watching soccer matches at weird times of day in Futbol-loving Latin America or football loving Britain is a thirsty business. But this year there are special considerations.

According to the Frankfurter Allgemeine Zeitung, a German beer cartel set minimum prices for their brew, and Bavarian biggie Carlsberg is on trial for participating in this illegal but ancient practice. Germany keeps out foreign beer competition with its venerable Reinheit rules which ban any beer not made purely with malt, hops, yeast, and water, so foreign brewers are looking forward to offering cut-price alternatives to fill your beer stein.

And in Britain, another country fond of beer, the Wetherspoon chain of 900 pubs is boycotting any beer not brewed in Britain—or in the USA or Australia—as part of its support for British exit from the European Union. (I keep an eye on Wetherspoon because it is a key holding of a British fund that I follow and recommend.)

How ironic that the trio of NAFTA countries won the right to host the 2026 World Cup, beating Morocco, where there are more soccer fans than in the US. Now if we could just work out a trade deal with Mexico and Canada.

We have ways to play implications of the rise in US interest rates and the beer market, discussed below.

*To start with the froth, Anheuser-Busch-InBev (BUD) is no longer a St. Louis US brewmeister but a Brazilian one with its primary listing in Belgium with 200 brands around the globe, like Stella Artois and Michelob in the EU; Klinskoye and Sbirskaya Korona in World Cup host Russia; Modelo, Brahma, and Antartica in the soccer-mad Americas. But its lead US brand, Budweiser, is a good corporate ID for Brits. The consensus analyst view is that BUD is going to grow its earnings faster than other brewers in coming years, by over 4%, and that it profits will soar at over 12% annually thanks to smart marketing and volume. It has a p/e ratio of about 26 and pays a 4.4% dividend.

Moreover, beer is a famous traditional defensive play.

Funds

*Aurora Investment Trust, a UK closed-end fund equivalent, is a heavy investor in Wetherspoon which appeals to Brits because its offers non-alcholic drinks (including Pepsi bottled by BUD), decent lighting, and food, which means mothers can take their children there. AIVTF has barely budged since we bought it.

*Our emerging markets risks are mainly in other closed-end funds and we are exiting four for different reasons. First down is Herzfeld Caribbean Basin Fund which is proposing to raise more money with a capital increase, of interest more the to fund managers than to those owning the shares which will be watered down. CUBA is heavily invested in Caribbean tourism and Mexican conglomerates, but of course, it is not getting into the place it was founded to invest in, because Castroland is still a no-no. We invested alongside a very experienced former fund manager who assumed, wrongly, that the quirky small fund would do as well for its investors as for its managers. We made about 5%.

*Second sale is the result of a merger within the Advent Claymore convertible funds group run by Guggenheim. The reason is purely technical. When Advent Global Convertible Securities and Income Fund merges with its US counterpart AVK and its general equity fund LCM, the combined fund will be almost entirely invested in the US, outside my brief. The combo is to cut costs and shareholders have a vote. Our fund yields 9.7% and will be missed.

*As the taper tantrum hit eastern Europe we consider it time to take our profits from Central Europe Fund, CEE. Hungarian yields on 10-yr notes hit a high for the past year after inflation figures came out. Romanian inflation rates hit a 5-yr high at 5.4%. The Czech central bank barred real estate loans worth more than 4 year's salary for borrowers after Czech inflation logged in at 2.2%, over its 2% target, in May.

The odds are high that the Visegrad nations (also including Slovakia and Poland)  run by populist parties may rebel against rate-hiking, discipline, and lower central bank support from the Europeam Cemtral Bamk. They also practice unsavory nationalist opposition to emigrants and old-time controls on the press and the judiciary, under cover of calling it independence from excessive EU bureaucracy.  Thy can be anti-Semitic. I don't need this fund or these country risks

*The last fund we are dropping is Eaton Vance Tax-Managed Global Income Fund, EXG which is run to pay out its dividends in the form of return of capital, thereby sparing owners the tax that otherwise would be payable. It has done well for us but the new tax laws will cut out its edge.

*While Pimco funds are changing their rules on industry concentration I am not worried about our PDI, Pimco Dynamic Income fund (run by the US arm of Germany's Allianz SE) which I consider a way to get into Pimco fixed income on the cheap. The fund tends to be close-mouthed about its holdings and discounts in part becuause the huge bond house doesn't want to tip its hand.

*You notice that I am not fleeing Latin America or even Mexico despite currency and political risk. One reason is that Morgan Stanley is advising yield seeking investors to hit the Mexican Fibras markeet. A Fibra is a Mexican REIT. They can gain from the likelihood of a rate cut in Mexico, write Nicholaj Lippmann and Jorel Guilloty for the brokerage. The theme is also taken up by Nancy Zambell writing on real estate investmetn trusts in WallStreetsbestdividendstocks.com. Apart from Fibra Uno in Mexico we also have one in India., Ascendas India Trust, which is in the main portfolio.

Americas

*Brazilian Cosan Ltd has now ended its Brazilian “Depository Receipts program, which has zapped the CZZ share price by 2.7%. Trading will end July 11 and they will have to use ADRs trading here on the NYSE. This is purely a technical matter as the locally issued BDRs are being sold in São Paulo as most investors who are seeking exposure to Brazil are not selling.

*After breaking back into the $300 price range, Mercado Libre fell back under that key round number. It is still likely to gain from cheaper money in its native Argentina. MELI's biggest market is Brazil which is not going to stop shopping where goods are cheaper.

*Bank of Nova Scotia saw insider buying yesterday. BNS is more exposed to Latin America risks than other Canadian banks which focus on the US.

*While Zacks put a strong sell on Banco Latino Americano de Comercio, the BLX stock from Panama is up 1.5%.

*Canadian simulator firm CAE created a jv with Avianca to train pilots in Colombia for regional airlines flying Airbus and Boeing planes.

*I misinterpreted the leaked forecasts from Schlumberger Ltd earlier this week because they were lower than guidance and analyst expectations, not higher. The reason was costlier startups in the Middle East which I did not discuss as it was well down in the Reuters article I quoted. Crédit Suisse commented that “the issues are transitory” but lowered its forecast for Q3 to 49 cents from 54 cents but did not change others.

Asia and Africa

*China Eastern Airlines is up nearly 3% since the Trump-Kim talks because it can increase tourism.

*Azure Power gained over 2% and is riding high because of recent solar energy deals in India.

*Infosys has opted to delist its shares in the Euronext Paris and London markets, according to a notification to the SEC. That is not why the stock of INFY (sold) has lost traction, however. It is because high profile executives Sangita Singh, global head of manufacturing and EDGE products and Nitesh Bonga have left Indian tech giant. Bonga will become Chief Operations Officer at GlobalLogic.

We sold too soon but Indian egos running major companies was always a yellow light for me.

*South African Naspers took on 4.5% as its top holding, Tencent, actually lost a bit more than that in US trading. NPSNY earlier said its expects its EPS to soar in the FY which ended Mar. 31, to $26.08-$26.58. Its prior year eps was $5.48, now adjusted down from the $6.77 initially reported. Its preferred metric, core earnings, with non-operational and non-recurring items stripped out (including the proceeds from selling ~2.1% of TCEHY) will be $5.73-5.90, vs $3.37 last year.) The restatements of earnings are because of changed accounting standards.

*Muddy Waters did an article calling for shorting TAL Education Group of China, NYSE-TAL, for fraudulently overstating its net income over the past couple of years over 40%.  We owned a different education group which also cratered.

*A boost for non-CRSPR gene manipulation can help our Benitech Biopharma from Down Under which also is getting more funding from Nantworks. We own its warrants, not its common stock.

Europe & Middle East

*Swiss Roche won a key use designation from the US FDA, for Avastin after surgery along with chemotherapy to treat advanced ovarian cancer, the sixth use allowed. It won earlier approval for use without chemo in these cases of the most deadly female cancer.

*Globes Israel thinks the boost in Teva stock is based on competition management, lowered debt, better than expected sales of copaxone (which lost its patent for treating multiple sclerosis), and two new drugs brought on during the interregnum, notably migraine drug fermanezumab which should get FDA approval soon, and Huntington's disease drug Austedo which is gaining for other uses and will be a $1 bn seller by 2023. Both of these branded drugs were developed by the TEVA former Chief Scientist Michael Hayden.

*GlaxoSmithKline (GSK) revealed new data showing that long-term use of Benlysta against lupus does not result in organ damage to the patient and that adverse events like infections fell over time. 

*Ormat Technologies was downgraded by analysts at Guggenheim from a "buy" rating to a "neutral" rating. They now have a $72 price target on the stock. 40.3% upside from the current price of $51.33. ORA is US incorporated but owned by Israelis. It is suffering the impact of the volcano eruption at its geothermal site in Hawaii.