There are some real dangers lurking in the economy of the Lone Star State beyond the deflation of Donald Trump by his Republican Party opponents.

First of all, with oil prices under water, the Houston market for real estate, both personal and office, is also threatened. The days of bidding wars and rent increases are over.

Then too, with the Mexican peso losing height, the border shopping malls and boutiques are also under threat. Mexicans can no longer afford to spend money in Los Estados Unidos.

Then there is Zika, which will hit our southernmost regions as soon as the hot weather comes. Texas, unlike Florida, makes it particularly hard for pregnant women who might have been infected by a mosquito (or a sex partner) to have an abortion.

But most importantly, the whole claim of Texas as a bellwether for low-tax high-growth policies for the rest of the country is facing its own Alamo.

New Yorkers constantly run into problems over one aspect of Texas life: how you pronounce “Houston”. Our Dutch-influenced lower Manhattan street is called “House-ton” whereas Texans say “Hughes-ton.” But we are in the same country . So the attacks on Donald Trump in last night's debate seem to have boosted Wall St.

Bad News

*We were hit by a boomerang from Benitec Biopharma (BNTC) last week. BNTC announced that it will wind down its hepatitis C program in phase II clinical trials up completion of the cohort 4 inoculation against the virus using its TT-034. This is the most advanced of its patented gene-silencing technology, DNA-directed RNA interference.

Following the overnight Australian report of its 2015 results the share has lost 53% of its value and the warrants, just purchased last week, are down 39%. Trading has been halted. Benitec will have to go to the well for more financing almost immediately, watering down our stake. Maxim, the brokerage which did the underwriting and Nasdaq listing has downgraded Benitec to hold from buy, a polite way to say sell on Wall St. And it lacks a CEO.

The main reason for ending the hep C program is that the board decided there were so many alternative ways to treat the disease that had come to market in the 2 years since the “first-in-human” carefully esclated dosage trials began, that there was no interest among pharma companies to partner with BNTC. Moreover, it was apparently also difficult to get patients to enroll in the trial now being discontinued. This will result in no financial obligations for BNTC.

The hidden reason for the trial ending is that the Australian firm has blown through most of the money raised by the ADR issue and more since last summer, US$13.8 mn or A$18.8 mn at the then exchange rate. Its losses in the last 6 mos. Of 2015 hit A$16.1 mn, not leaving much over. The former CEO misjudged the urgency of raising money right as China's markets crashed, and his replacement has not yet been found.

Its chief scientific officer, Dr David Suhy, says that the Hep C trials showed that the DD RNAi jab “transduces hepatic tissues, expresses the anti-HCV shRNA, and has a favorable safety profile.” There were “no significant adverse event” in the 4 cohorts who received the study drug.

BNTC says its next program, against hepatitis B, can build on the discontinued Hep C trials. It paid A$2.5 mn last summer to regain full rights to the DD RNAi program for Hep B from former partner Biomics, and in Dec. it presented in vitro (test-tube) data which, it says, “is attracting strong interest from pharmaceutical companies.
It is also working on age-related macular degeneration and ocular pharyngeal muscular dystrophy.

I think that a bunch of stupid mistakes have been made by BNTC. First of all, it should have offered those cohorts accepting lower doses of TT-034 than would have cured their hepatitis C disease a chance to get a therapeutic dose once it had been cleared. Moreover, there are hundreds of potential patients with both hep B and hep C who can be treated with both BNTC's jabs, most recently the victims of a New Jersey drug-addict pharmaceutical nurse who used syringes he had access to because of his job to take drugs, after which he used them again to deliver injections in the hospital he worked at. These people would be happy to sign up. Some of them were also exposed to HIV (which counts as a co-morbidity no-no in drug trials, but not all of them.)

This is a high-risk company from far away, even if they do talk English. It stumbled badly. This is the price we pay for our global beat, and our willingness to take risks. The warrants (options) run until August 2020 by which time there may be a resolution.

Mixed News

*I also averaged down on Vale (VALE) too soon as it was off another 2.5% last week. VALE is Brazilian and set to become the world's largest and cheapest miner of iron ore this year as it completes its Carajas mine and rail access. Its CEO via conference call said that it is prepared to sell some of its assets to fund further future growth. Brazil is over-sold, in my opinion and that of J. Mark Mobius, former emerging markets stock chief at Templeton. His views were echoed by Michael Hasenstab, the Franklin Templeton “contrarian” who says that Brazil is one of the few “distressed situation emerging markets” which “are in crisis but appear to have a clear path for exiting the crisis over the medium term.”

Separately, Brazilian sovereign bonds have fallen so low that the govt is thinking about removing them from the market by buying them back, according to Bloomberg.

Good News

*An 8^th year of losses at Royal Bank of Scotland (RBS) means there will be further delays in the Tory government's plan to privatize the bank, bailed out during the global financial crisis from its bad old management. The UK govt owns ~80%+ of the outstanding stock. Until the common is viable RBS (and its sub, Nat West) cannot repay all the non-cumulative preferred US$ shares we loaded up on at $25 (the original issue price.) We got cash back from one particularly generous yielding RBS pref but the others look like being around for a while.

*Now for some good news from an obscure company we recommend. Chartists at UK www.Investorsintelligence.com with which we trade ideas have put a buy on the Norwegian shares of Tomra, TOM-Oslo, which are at NOK 84 now, with a target price of NOK 100. Tomra, a very long-term holding, makes sorting machines for pharmaceutical manufacturing and recycling, outgrowths of its original business, which was building reverse vending machines for bottles and cans turned in at supermarkets.

*Here is another. Cosan (CZZ) of Brazil announced that its Cosan Biomassa sub which produces fuel pellets from sugar-cane waste which can be used in place of coal to produce heat or energy, will get an investment of up to Reais 70 mn from Sumitomo of Japan, which will hold ~20% of the sub, which is part-funded by the Brazilian govt science program. The plant is at Jau near São Paulo. The deal will have to be approved by the Brazilian govt CADE, which vets inward investment. CZZ was up 3% last week.

*Finally the rise in oil prices again has boosted Ecopetrol by 4.8%. EC is Colombian.

*GlaxoSmithKline (GSK) which has reported good trends in its HIV drug sub ViiV was upgraded to conviction buy by Merrill Lynch for retirement accounts because of its 6.7% yield. Cantor Fitzgerald began rating GSK with a hold.

*Novo Nordisk (NVO) was tipped by Spencer Osborne on www.seekingalpha.com because of its good results with recent trials for Tresiba head-to-head with diabetes drugs Lantus (from Sanofi SNY) where it reduced hypoglycemia risks by 11%, which was statistically significant. NVO also did well with its HbA1c semaglutide trial which allowed lower doses of the insulin in those treated, achieving a primary endpoint. Mr Osborne recommends NVO at its present price of $46 despite the Novo's cautious guidance on this year's growth after its 2015 annual. He thinks the Danish firm will beat SNY in the US market with newly launched Tresiba. “Upside is greater than the downside”, he concludes. Osborne, an old hand at SA, runs Sirius Buzz Premium, a website about satellite radio.

*Israeli transport security firm Ituran (ITRN) will pay a divided of 31 cents to shareholders of record Mar. 21 on Apr. 6. It is an Argentina play with a safe 2% dividend.

*Reckitt Benckiser (RBGLY) made another 52-wk high last week in London, where it is now RB. Not having to spell out Benckiser is not the only reason it is up sharply. The other is that it is a major maker of condoms in Zika-afflicted Brazil.

Funds Bad and Then Good

*Herbalife which Bill Ackman has been shorting, reported earnings which beat and moreover is in talks with the Federal Trade Commission to find a solution to charges that it is a Ponzi scheme. This is more bad news for Pershing Square Holdings (PSHZF), the UK-traded Dutch closed-end fund Ackman set up last year. We went for it hoping to learn how to invest better overseas. So far it has only produced information on how to invest worse. PSH-London.

*Another European offshoot of a US fund, Kennedy Wilson Europe (KWERF), a REIT, was up 4.6% last week thanks to good results from the fund manager Kennedy Wilson, which collects performance fees from KWERF. I assume that there has been good performance at KWERF but no details are out. It announced that it had invested ~$1.7 bn in Q4 with partners including KWERF, which invested $100.5 mn while disposing of $186.5 mn in real estate. Presumably some of the surplus from property sales are coming to us, but it is not clear.

*From the newsletter Wallstreetsbestdividendstcks.com daily, here is a commentary which applies to our Allianz stock AZSEY and our closed-end fund, Pimco Dynamic Global Income Fund, or PDI. Our PDI invests 40% in emerging markets. Bob Carlson's Retirement Watch writes about Pimco All Asset All Authority D shares, PAUDX, an open-end fund from Research Affliliates which invests in Pimco funds (both long and short).Research Affiliates is quant Rob Arnott's group and is not linked to AZSEY but likes its global funds. Mr Carlson writes:

“Research Affiliates use their proprietary valuation models and the economic forecasts of PIMCO to determine the allocation.

“The fund was a solid performer until 2013. Then, the valuation models indicated that most U.S. assets were overvalued and emerging market assets were good values. The fund gradually shifted about a third of its assets from U.S. investments to emerging market stocks, bonds, and currencies. It also started to sell short U.S. stocks. There also were significant positions in inflation hedges. In the short-term at least those were costly moves. The fund is down 15.75% for one year and 8.08% annualized for three years.

“In early 2016, however, the emerging economy assets are doing better than most U.S. assets and some are showing positive returns. Also, over the last year the fund reduced its inflation hedges. Other positions in the fund include U.S. corporate bonds, alternative strategies, and global bonds.”

PDI was up marginally last week and gained 15% in the past year.

*A decision by the European Union to end issue of the euros 500 note of which there are about euros 300 bn outstanding may boost use of bitcoin (BITCOMP) and gold by people mistrustful of government. We recommend holding physical gold (legally and subject to US or foreign taxes) through accounts with our UK advertiser, bullionvault.com/ We also tip an exchange-traded fund, SPDR Gold, GLD. Both are sponsored by the World Gold Council which supports the mining industry.

GLD and gold were down last week because surprisingly good US personal income, consumer confidence, and industrial production numbers increase the odds that the Fed will raise rates again, which means it costs more in lost income to hold gold or cash.

*New Ireland Fund (IRE) will report its dividend March I. 

*So too will Eaton Vance Global Tax Managed Dividend Income Fund, EXG.

*Yoma Strategic which invests in Myanmar is up on the renewed risk-on mood. YMAIF or Z59-Singapore.