More Inflationary Pressures

There will be no blog Monday, Memorial Day. when US markets are closed. Today, we saw more evidence of worrying inflationary pressures from the personal consumption index hitting 3.1% in April over prior April, up sharply from the March rise of 1.9%, and up also against the consensus forecast of 2.9%. This is an index that leaves out the most volatile sectors: food and energy.

The full bill for the probably dead Biden budget and infrastructure plans is $6 trillion. It ain't gonna fly.

The impact was an almost immediate jump in US 10 yr treasury yields to 1.502% from the prior level of 1.444%. Note that there was a bit of good news in the numbers, as factory gate prices fell 3.1% from the March level. But the overall inflation level is at a 13-yr high.

The news also hit the hitherto rising loony. The Canadian currency fell 0.4% to $82.55, presumably on the assumption that inflation will cross the nearest border.

Equity, Fairness Equitable, Letters, Scrabble, Equal

Image Source: Pixabay

*We have a reporting company today, Höegh Partners LP, HMLP, the Norwegian-owned LNG shipping company, facing competition from its own parent from Bermuda, now privatized. The conference call was posted by yesterday without the results which came out today. Höegh said covid-19 was responsible for its huge revenues miss of $701.67 or 5.2% from the prior year, coming in at a mere $534.78 mn. It beat forecasts on earnings by 22¢/sh at a level of 61¢/sh. While I like the concept of using frozen LNG to ship frozen LNG (avoiding heavily polluting bunker fuel) I think the prospect of competition from its privatized parent will make this stock very risky. Moreover, the fiasco over results, for which the company pays, and the lack of access to convertible share analysis elsewhere (even Value Line has dropped this), means I will be sailing solo, which I fear. It barely trades here.

*Also reporting was Johnson Matthey, JMPLY, up 7.73% to $92.1 today before the opening, but not covered by TD Ameritrade. It reported on its fiscal year 20-21 (to end March(. Shares of the catalytic converter firm dropped 1.5% yesterday but recovered today. It matched estimates for both profits and sales, although the former were lower because of higher costs which would not repeat this year, according to the British firm. As noted yesterday, the stock was boosted by Equita, in fact by analyst Massimo Borisolli according to Dow Jones. Analyst Laura Noy of Hargreaves Lansdown is quoted today as being more skeptical about its eLNO battery and hydrogen tech which she says will not hit the bottom line for a year because the partner deal with Plug Power will take that long to generate sales but will cost up to £600 mn in the current FY. Last year it was expected to only spend £486 mn. Pretax profits last year mostly from recycling platinum metals from cars came to £238 mn, vs FY 20-21 levels of £305 mn. Underlying operating profit (without exceptionals and one-offs) came to £504 mn, barely down from prior FY's level of £539 mn and over consensus estimate of £302.8 mn. Sales were up at £15.67 bn from prior FY £14.58 bn, and nicely over the consensus forecast of £13.89 bn. The dividend was raised to 50 UK pence, up from 11.125 p last FY. Sorry about this. I can only report what I can find. Plug Power was tipped today by BTIG. More materials below.

Drug dealers

*My supposed largest US holding, Medtronics, turns out to be Irish HQ'd, although to be honest when I bought it 30-odd years ago it was American. Its operations are all in the USA but it has its headquarters in Dublin, presumably to save on taxes. Given the politics, I will not add it to the model portfolio, although my performance record with this stock beats anything else I own. (It even tops other golden oldies like GE, up because of orders from Airbus for single-aisle planes.) It fell 0.4%.

*Novartis was tipped by Bashar Issu, who doesn't sound Swiss. NVS opened off 0.76% at $88.48.

*Enilivex, plotting to undermine its fellow British Columbian Zymeworks, ZYME, in bi-specific remedies, is down another 5.34% today. I cut my stake when I read the ENLV corporate description of its wide-ranging technologies (many unlicensed from other pharma companies.) It is now a SELL.

*Zymeworks rose 5.63% the open, now up 3.06%. ZYME presents next week at the Jefferies virtual healthcare forum.

*Other smaller drug firms are doing better despite it being Friday and the end of May. Indian Dr Reddy's, RDY, rose 0.35% to open at $72.22.

*Bioline RX fell 1.72%. BLRX reported mixed earnings on May 26. Its share is down ~50% in May.

*Israel's Compugen, which has fallen a lot YTD, today gained 3.04% despite Israel being closed today and open Sunday, creating a cross border risk. Then it dropped back.

*Eisai of Japan rose another 1.4% to $67.22, ESALY.

*Astra Zeneca got EU CHMP approval of its Tagrisso to treat lung cancer. This follows a long list of wins, for Sotrovimab (developed with Vir) from the US for treating covid-19, plus its recombinant DNA vaccine being developed with Sanofi. A big biotech firm with loot can defeat a hedge fund gunning for its CEO (for being female or too marketing-minded.)

*Britain has ok'd the Johnson & Johnson COVID-19 vaccine.

*Danish Novo Nordisk is up a fraction after re-submitting its FDA application for a larger, 2 mg dose of Ozempic (semaglutide) for adults with diabetes. NVO already has approvals for the glucagon-like peptide-1 for lower doses of .5 and 1 mg.

Energy Saving

*Weapon maker BAE Systems signed up for the Paris Agreement to “ Race to Zero” (by 2030) to end global warming with the innovative technology in its supply chain. Some examples of where this will lead: making Australian Hunter Class frigates in energy-efficient shipyards; using the San Diego, CA All-electric dry dock with LED lighting and electric cranes to make ships; in Portsmouth Naval Base (England), de-carbonizing the with augmented reality and artificial intelligence; adopting additive manufacturing methods to cut pollution and production time for Typhoon fighters to 60 days from 100 weeks; producing the HMS Spey delivered last year with a urea filter to cut nitrogen emissions; crafting a future battery and solar tech aircraft which can fly for a year without refueling; and of course its zero-emission buses. It is also working with the military to offer synthetic pilot training saving 20 mn gallons of aviation fuel; and as reported already, delivering 13,000 low and zero-emission buses with more to come, saving 28 mn gallons of fuel and preventing 313,00 tons of carbon dioxide emissions per year. De-electrifying the military is BAESY's new goal.

*Schlumberger of the Dutch Antilles has been inching up all week. The reason appears to be that I will all its 3.3% 2021 notes for $644 mn before the expiry, avoiding issuing new common shares. The common rose by 0.22% on the news.

*Canadian Solar is back in the black today after CSIQ was lower Thursday. It is not a likely victim of Beijing's crackdown because it is small, and producing solar panels for export.

*French Total of is today's climate activist shareholder target. Once state-owned it was privatized.

*With oil majors under pressure to cut their carbon footprint even more from courts and shareholders, our NIO electric vehicle share is in clover, having doubled its factory capacity this week without spending money (the factory belongs to its HQ city Jianghuai.) NIO opened up 3.05%. at $38.91. It is also being boosted by good results from Nikola. NKLA is up nearly 20%.

*Cosan of Brazil is up 1,21% today. CSAN. It sells gasoline loaded with bagasse (sugar cane waste).

*If you don't like the price of Energy Fuels, UUUU, wait a day. Uranium as a rare earth mineral is up 1.4% to $6.91 after opening at $7.12. Its TP is $9.

*Sorting specialist Tomra Systems is up today in both variants, TMRAF by 4.75% to %50.24 and TMRAY up 1.98% to S50.94. I was told the price disparity results from taxes on trading the Y stock.

*Atlantica Yield, AY, a UK clean energy fund, rose !% to $42.36 today.


*AY is part-owned by our Canada ute, Algonquin Power & Utility, AQN, which gained 1.04%.

*Swedish Investor a/b is up 1.14% today to over $190.8 for the old shares. IVSBF's 4:1 split will cover US shares when the DTC delivers our old shares. This may take time.

*Sampo Oij of Finland is up only 0.76 to $23.77. It is too low to split.

*Reology is up and down after the real estate brokerage and escrow funding firm said it would do a private placement to raise $350 mn with exchangeable senior notes running till 2026. RLGY is risky.

*Shares of Lazard, LAZ the fund manager, rose 1.3% today. Its fund of funds LGI is down a bit.

Taiwan Fund, TWN, is up 2.02% to $31.63 because its new covid outbreak seems to be under control but would stop a Chinese invasion all the same.


*Antofagasta's drop has finally been explained. The new leftist parliament probably will be in power when the royalty agreements with Chilean miners come up for renewal in 2024 and will raise the fees to fund social programs, according to Goldman Sachs. There is also a strike going on against BHP, the Australian copper miner. ANFGF, whose ADR is based on the London stock, is a more or less Chilean native firm controlled by the Luksic family and may escape some of these sanctions, or not.

With Belarus and probably Russia in the doghouse, ANFGF has another strong suit, its potash mines, which can replace some of the fertilizer ingredients coming from Lukashenko-land.

*Our Canadian position in Nutrien, NTR, another potash firm, is up, by 0.93% to $62.17, a year's high.

*Bimbo is off 5.11% because Mexico's bread and cakes will become more expensive. GRBMF.


*Mercado Libre was tipped by Anon on SeekingAlpha who said it is in a s\strong position with opportunities. Why would anyone say this not tell us their name? MELI is the South American Amazon.

*Coupang is in the plus column today after a write-up by Scott Pane in Seeking Alpha. .CPNG is the Korean Amazon.

*Nokia is up 3.06% to $5.22 and Tekefonaktiebolaget LM Ericsson is up 0.45% to $13.35. There are memes boosting NOK but not ERIC.

*UK Vodafone is down again by 0.5% to $13.36. 

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