Morningstar, which 20-odd years ago ended its useful coverage of individual foreign stocks from Japan, is now going global again, with a "travel kit for global investors". Then I went to Chicago to plead with Morningstar to reconsider.

Now it has thought better of hiding behind our borders and is telling Americans their stick-to-home portfolios are 30% overloaded in US stocks compared to a market weighted world global stock index. It didn't quote me because nobody remembers what happened two decades ago, citing a paper by Vanguard fund managers.

While agreeing that some investor hesitation makes sense, like fear of higher costs, currency fluctuations, and corporate governance issues, Vanguard says "shutting out international markets means closing the door on a world of potential investment opportunities". Now Morningstar, in videos for its International Investment Week until May 22, has decided to also push global investing.

By telling people about how they need to buy global funds, Morningstar claims that to go global you need to let them find you a good fund manager who will buy big name funds overseas. Vanguard will pick up a lot of the business thanks to low fees or fares.

"Take the bus, and leave the driving to us." That is not our way. We pick stocks not fund managers. 

The puck was hit to him, the crowd roared, and then was hit into the goal basket by Vladimir Vladimirovich Putin. Eight times, 8 goals by the Russian president. Putin, 62, was skating on Sochi ice May 16 leading an unofficial National Hockey League "all-star" team to an 18-6 victory. Putin only started playing ice hockey in public 6 months ago, and according to the adulation-laden Russian press he had never played until 2011 and is "a natural athlete".

I sought insight from Claude, 14, her eldest grandchild and an ice hockey ace himself. Claude said "it was probably rigged, because you cannot score eight goals in one game, especially if you have only been playing for a few months."

Claude has made "a hat trick" (3 goals in one game) a couple of times and knows whereof he speaks.

While that hockey show was intended to prove that Putin has no health problems, it also marks a new rise in the cult of personality around the Russian president. In Russia, adulation of a Kremlin leader is not a Kennedy-esque myth about Camelot being reborn; it simply recalls Stalin's claims to all power, strength, and intelligence during the Soviet dictatorship.

Russia's ice hockey team lost 1 to 6 to Canada Sunday in the world championship in Prague despite some major Maple Leaf players staying home to join in the real NHL playoffs. When the Prague band struck up “O Canada” the Russian team skated off the ice in a fit of nationalist zeal.

Putin-land also failed to win at Sochi's Winter Olympics, where Canada also took the gold. Russian sports fans may soon realize that Putin's hockey puck goals are a sham.

Would that they also examined the flimflam over Ukraine! Two Ukraine "separatist rebels" were captured there over the weekend and confessed that they were Russian nationals and members of the elite Special Forces. 

Since early this year, 18,000 foreigners have used AirBnB and less well-known lodging services to book stays in private homes in Cuba. They pay in dollars worth 24 Cuban pesos in the shops. That means a very good profit for those housing the foreign tourists seeking cheaper accommodation than in the country's pricey and overbooked hotels.

Hosts spend part of those dollars to keep foreign tourists happy, buying fans and air-conditioners, beds and bedding, towels, soap, toilet paper, and toiletries. This leads to tensions with the majority of Cubans who do not have dollars and live in the peso economy because they lack a spare room or relatives in Los Estados Unidos. The same thing happened two decades ago when Cubans were allowed to open businesses offering home-cooked meals to tourists paying with dollars. The chefs bought the best foodstuffs available using 24-peso dollars, boosting prices for the locals.

Pres. Raoul Castro says he wants to unify Cuba's two currencies, dollars and pesos. The exchange rate is very unrealistic, set in the olden days when Cuba was subsidized by the former Soviet Union, and then kept up thanks to the late Hugo Chavez of Venezuela when oil prices were high. The 24:1 exchange rate is out of kilter with the real economy making it hard to end the partial dollarization, now 25 years old.

Our work was quoted last week by Dick Davis Digest, Investor's Digest (Canada), and Talk Markets. Readers Rajiv, Jean, Pablo, and Steven thanked me for explaining alpha and beta. More from Belgium, Israel, Australia, Brazil, Cuba, Colombia, South Africa, Ethiopia, Britain, Singapore, China, and Myanmar. One company reported today.

*Israeli car and truck tracker firm Ituran Location & Control (ITRN) released Q1 results which beat forecasts and announced a 16 cents/sh dividend under its new policy of rewarding shareholders with half its profits. Sales fell a moderate 2.8% to $44.2 mn in Q1 mainly because of currency factors (US$ strength) but would have risen 11% had the shekel, the Brazilian real, and the Argentine peso been stable from 2014's Q1. Those are its key markets and its produce revenues were off 8% and its subscription fee revenues off 1%. Gross profits came in at $23.4 mn, or 52.9% of sales, off modestly from prior year. Operating profit hit $10.5 mn or 23.8% of revenues, down 10 percentage points from prior year Q1.

Cash flow (earnings before interest, taxes, depreciation, and amortization) fell 8% to $13.2 mn and were a shade under 30% of revenues, vs 31.7% the prior Q1 in current currencies. In constant EBITDA would have risen 11%.

The bottom line was similar nipped with net profit at $6.8 mn or 33 cents per share. In Q1 2014 it earned $7.3 mn or 35 cents/sh.

We bought ITRN because its heat seeking software was cannibalized by Israeli techies to create a cheap way to stop Gaza-launched missiles from hitting the country. Then we decided it was a good stock to own. It tracks truck fleets to enforce rest regulations and cargo security and cars for theft. It also produces secure wireless communications systems for vehicle fleets. Its US operations are growing fast from a low base. Its currency ills in Q1 are likely to reverse with the Israeli shekel now on an uptrend vs the Greenback. ITRN also will have a nice cash pile ex-dividend at $45.6 mn from retained earnings and current assets excluding cash of $65.9 mn vs current liabilities of $46.4 mn. It is up over 6% today to $25.05, an all time high.

Drug Culture

*As anticipated, Galapagos underwriters exercised their “green shoe option” to buy an additional 15% of the ipo (about 750,000 ADRs and 233,000 ordinary Belgian 1:1 euro-denominated shares) for their own account at $42/sh. GLPG is a Belgian drug discovery shop which hired our former biotech maven who always had a good eye for startups. That's why we followed him into what was GLPGF. I do not know the terms of conversion which reader JS asked me about. My account is a mess because of the transfer. I own plenty of GLPG (500 shares because of my confidence in our former writer) despite having sold half. In Euroland trading today it fell to $49.92, off 1.2%.

*GlaxoSmithKline reported today that its attempt to monitor patients treated to work out predictive surrogate endpoints apart from death for chronic obstructive pulmonary disease with its Eclipse study. It has shown that treated patients whose health improves with treatment may not require as much hospitalization and suffer fewer exacerbation of their COPD, a typical burden of the disease. GSK now advises that patients and doctors work together to monitor their health closely and manage their disease. It sound so intuitive I cannot believe they had to do the Eclipse study, which stands for

Evaluation of COPD Longitudinally to Identify Predictive Surrogate Endpoints, and was published by Thorax.

*Bloomberg expects that Novo Nordisk will dominate the insulin blockbuster market in 2020 of drugs with over $1 bn in sales with 6 products: NovoRapid, the 3^rd bestseller insulin; Victoza, Levemire, Tresiba, NovoMix/NovoLog, and Xultophy. Most of the NVO blockbusters to be are combination drugs, except for Victoza which is solo liraglutide and also used for weight control. Tresiba awaits FDA approvals although it already sells in foreign markets.

No other diabetes drug producer has more than 2 entrants for 2020 sales sweepstakes while NVO has 6 of the 18 contenders. It counts as a specialist, not a general practitioner, to quote Peter Fogel, our ad copywriter. This kind of forecast should be taken with a grain of salt, except for diabetes perhaps with a grain of sugar.

*Its Ebola vaccine phase I trials, funded by a Johnson & Johnson sub, are continuing to boost Bavarian Nordic, our other Danish drug firm picked by our ex-biotech maven. BVNKF.

*Naspers made a new 52-wk high at 156 pence in London trading today. However, in US trading Tencent, TCTZF, its 32% holding, is down marginally.

*UBS analysts initiated coverage of Allianz Versicherung with a "buy" rating today. AZSEY, the German owner of a controlling share in Pimco, is one of my faves. Declining Pimco assets under management reflect the lousy bond market but I don't think this affects AZSEY's underlying business.

Iron Ore and Other Raw Materials

*Rio Tinto is following BHP Billiton in divesting some non-ferrous assets, Pacific Aluminium, for which it has hired Crédit Suisse advisors to aim at $1 bn in proceeds, according to The Financial Times. BHP's spinoff, South32, started trading today at a total valuation of about A$9 bn, vs the A$1.2-1.3 bn expected earlier. This pushed down BHP shares over 7% today and cast a pall over the prices of commodity producers starting with the rival to both, Brazil's VALE is off by more than 4.75%.

These firms all supply iron ore to China. When Mao Tse-Tung took power he encouraged Chinese villagers to set up mini steel mills in the countryside, which hurt their lungs to make low quality steel which could not be used industrially. These days, Beijing is still setting an unrealistic industrial policy for steel.

China wants to bring its steel making up to international standards. Rio Tinto expects local production will reach 1 bn tonnes/yr by 2030, 20% more than the whole world produced last year. Rio wants to be a partner in upgrading Chinese steel technology. But Beijing is not sure it wants to continue to boost steel output while ruining air quality. Under Pres. Xi Jinping, China has begun shutting in the most polluting local steel mills to cut production as the economy grows more slowly.

China again also wants to go local, by using 30% scrapsteel to replace imported iron ore. This would save energy and money but make life harder for BHP, Rio, and VALE. Currently China only feeds its steel mills with 11% scrap.

Vale sold out of its Canada nickel lines and pulled back on capex in Africa early in the crisis and is focusing iron ore mining on the cheapest ore. However, like China, Brazil is conflicted. VALE is the key developer of infrastructure to bring on raw materials from the Brazilian interior and operate export ports via Valepar, which owns 32.4% of its capital. Meanwhile Vale controls Valepar along with state-owned Banco de Brazil.

The Brazilia govt also owns 12 golden shares exercised to oust its former expansionist CEO and replace him with current CEO Murilo Ferreira Analysts reacted with horror and put a sell on Vale; now they rate it hold. Vale also owns mines jointly with BHP in Brazil.

Vale has suffered a halving of its US$ share price in the past year because of lower Chinese demand for iron ore and the sinking real currency. It has a negative p/e as it is losing money, but it also declared a 5.8% yield for 2014 (to be paid this Nov 6.) I am ahead in my Vale holdings which pre-date my putting the stock in our model portfolio. It is rated BBB (down from BBB+) by Standard & Poor's. 

*VALE is not the only Latin American commodity firm in the bears' sites. Shareholders also dumped Colombian oil producer Ecopetrol, EC, down 2.7% in early trading. 

*Along with other oil producers, BP plc was downrated to sell from neutral today by Goldman Sachs which set a GBX 364 target price, down from GBX 410.  

*Brazilian sugar and ethanol producer Cosan, CZZ, is down 2.5%. 

*However, Allana Potash (ALLRF) is up over 40 US cents for the first time YTD. It is developing a huge Ethiopian mine and infrastructure to ship its output with help from Israel Chemicals and the International Finance Corp (the World Bank's free market arm.) 

*Barrick Gold, whose US$ denominated bonds we own, suffered another boardroom reshuffle today as Prof David Naylor resigned to resume his academic career. ABX has boardroom issues dating back to the reign of founder Peter Munk. One reason I am sticking with the bond is that I visited the Puerto Viejo mine in the Dominican Republic and now it is being expanded and given a new energy source to save money and the environment, liquefied natural gas.  

Fund Notes

*My note on Cuba, written for a retirement publication, is reprinted above as a warning to those piling into Herzfeld Caribbean Basin Fund, CUBA, at an excessive price to its net asset value over the apertura to the Castros. I would not pay a premium of more than 34% to buy the closed-end fund Tom Herzfeld runs to express my enthusiasm for normalization of relations. 

*Yoma Strategic Holdings combined with another Singapore firm, Hyflux, to build a potable water facility in Myanmar, where YMAIF invests. It is for the taps of residents on its new Pun Hlaing Golf Estate, a property development under construction. The water is not for the golf course but for the residents and will produce 1000 cu meters or drinking water/day. Sales have already begun of 30 townhouses called Lotus Garden Villas, at Pun Hlaing, which is due to be completed this year. Yoma also runs a daily shuttle bus from the estate to Yangon having built a bridge to improve access. This is Hyflux's first Myanmar sale.