The trouble with stashing all your ill-got gains into a secret offshore account is that you may be found out. This happened to Jean-Marie Le Pen, founder of the French right-wing Front National party. He turned out to be less up-front or nationalistic than expected, with a Swiss bank account.

The trouble with stashing all your ill-got gains into a secret offshore account is that you may not be able to access your money if you need it. This happened to the accused British flash-crash trader Navidar Singh Sarao, so far unable to raise £5 mn in bail from his alleged secret accounts. His parents in Hounslow raised £50,000 of the total. Navindar is alleged to have made £26 mn from his spoof trading which caused the May 2010 market selloff. The proceedes were placed in an Employee Benefit Trust and then written off. The remainder was put in a company called Nav Sarao Futures Ltd in Anguilla, an offshore Caribbean island, with a fellow Sikh partner who manages a bank in Abu Dhabi. Unless he can pay up, Sarao, 36, may face British jail before he is extradited to the US where he faces multiple charges mounting to 380 years of prison.

European inflation in April rose from -0.1% in Q1 to zero. This means that its quantitative easing policy may encourage people to spend money rather than keeping it for another day when it will buy more. The eventual boost in spending will help the US economy and that of Third World countries (I hope, fingers crossed.) However in trading on Thursday, my Euroland favorites fell more sharply that Wall Street did on Wednesday after the Fed by silence extended the period for low interest rates beyond June. More on what this means and other macro news for paid subscribers below. And the dollar continues to drop.

Pope Francis keeps on getting things right. So far this week he has backed calls for a full accounting of the Argentina “disappearances” under the military junta. He also stated that the underpayment of women doing the same jobs as men was a “pure scandal” (despite the 30% discount for valuing females in the Bible.) And he has granted a Papal Knighthood to NY Rabbi Arthur Schneier, 85, for his work in supporting religious freedom. Austrian-born Rabbi-Knight Schneier, rabbi emeritus at Park East Synagaogue, came to the US as a child. While almost all Papal Knights are Catholics, Pope John XXIII also knighted a rabbi.

Given a sword by Cardinal Timothy Dolan at the ceremony to mark his becoming a Knight of St. Sylvester, particularly appropriate for someone born in Austria, Rabbi Schneier said he supported arms control. “What should I do? I'm in favor of gun control and sword control” he asked the NY Cardinal who replied “beat it into a plowshare.”

Hard and Soft

*Brazil's iron ore miner Vale reported a Q1 loss of $3.1 bn compared to a profit last year of $2.5 bn because of glut in its major business. It continued its policy of exiting marginal businesses like transport and non-ferrous but these moves were inadequate given the China-generateed collapse in iron demand and prices. Its revenues fell by a third to $6.24 bn. It also reported a drop in cash flow (earnings before interest, taxes, depreciation, and amortization) of 61% to $1.6 bn. Note that VALE reporting in US$ is because it is a global company whose basic costs are incurred in declining Brazilian reais. It should gain an edge against miners whose costs are incurred in stronger currencies like the A$. VALE.

*Nokia released its Q1 figures in Finnishletting the locals cut the price of its stock nearly 10% before the rest of the world could react to the awful news. By now it is only off 8% as US trading has begun.The Finnish edge may go the way of the dodo before long, if NOK completes its planned takeover of Alcatel-Lucent of France, which is now also in question.

The results were lousy at the very Networks part of NOK's business the ALU deal is supposed to beef up. There sales cratered along with margins which sank to 3.2% from 9.3% a year earlier. Sales fell to euros 85 mn from year-earlier euros 216 mn. This poor showing destroyed the profits Nokia built up in its HERE map business which is supposed to be sacrificed at the altar to enable the ALU deal to proceed, a tough strategy to grasp. HERE sales rose 25% and its location software for new cars sales rose 29%. Why kill the golden goose?

Overall NOK sales rose 20% y/y to euros 3.2 bn but fell 16% sequentially from a good final 2014 quarter. The same pattern also applied to earnings. In non-IFRS terms, they were up over Q1 2014 at euros 200 mn from 172 mn a year earlier, but sharply down from the euros 356 mn of Q4. Per share earnings were a non-IFRS 5 eurocents vs 4 eurocents in Q1 '14, but off from 9 eurocents in Q4 '14. The company also reported diluted figures where the trend was the same as for the non-International Financial Reporting Standards ones.

The outlook was marginally weaker too. NOK cut its estimated operating margin figure for the year to “the midpoint” between its earlier estimate range of 8% to 11%, which is a backdoor way of saying it will be in single digits. Sacrificial lamb HERE has higher operating margins estimates, at 9 to 12%.

There are good points too. First NOK expects to spend only euros 250 mn in capex this year, which includes buying ALU. This can come entirely from Finnish deferred tax assets, losses from its money-losing year offsetting taxes payable. (Other countries still can claim taxes.)

The 2^nd largest shareholder in Alcatel, a French firm called Odey Asset Mgm with over 5% of the stock, says it will opposed the Nokia deal which it claims is a merger rather than a takeover as presented. In a merger Odey thinks it should get a premium. Unless other shareholders agree, this is unlikely to matter because ALU will not hold a vote; only NOK will.

*Security systems maker Gemalto of Holland did much better in revenues but being Dutch it did not report interim profits for the quarter. Sales rose 29% to euros 686 mn at current exchange rates, and 19% at constant ones. This gives you a hint that it does a lot of business in the land of the free. In fact its largest and fastest growing business is from payment and ID systems whose sales in “the Americas” rose 49% y/y.

While it is annoying not to have Q1 profit figures, there is more justification for this than merely conservative Dutch tradition. In early 2015, GTOMY bought out SafeNet, a fast growing tokenization maker for euros 727 mn. It also bought a Swiss print company's security arm, Trueb AG, in Feb., buying Swiss francs at what shortly thereafter became a bargain level. This should enhance the now flat business of providing ID to governments. Both moves have to do with long-term strategy rather than short-term gains.

*BCE managed to beat forecasts by 5 loony cents/sh despite reporting earnings down 13% because of a one off litigation charge over satellite TV piracy lawsuits which nipped earnings by C$137 mn. Net came in at C$532 mn or 63 loony cents/sh vs prior year's C$615 mn or 79 cents. Without the charges for fines, earnings would have been 84 cents/sh above the Thomson-Reuters consensus forecast of 81 cents.

Revenues rose 2.8% in all three of Ma Bell's businesses, mobile, landlines, and TV to reach C$5.21 bn.

Banking and Finance

*Our Allianz should gain succor from the hiring of ex-Fed chief Ben Bernanke as senior advisor at US fund manager Pimco, its sub. Pimco has lost $123 bn of assets under management since last August when its former chief, Bill Gross, exited to avoid being sacked and made a lot of stink. Pimco also lost Mohammed El-Erian, another rainmaker, in the runup to the Gross Grexit. Now it can offer an even more prestigious economic advisor. AZSEY is a German insurance company which still has Mr El-Erian as an advisor. Mr. Gross in an interview praised the hiring of Bernanke as a fitting successor to himse.f and also predicted that the Fed will raise interest rates at some point this year “just to prove that they can.”

*Now essentially nationalized (at 82%) Royal Bank of Scotland is being chastised for the sins of its former private sector pirates. It produced a loss of £446 mn for Q1 vs a £1.2 bn gain in Q1 2014 mainly because it had to create reserves for misconduct and litigation of £856 mn. Of that total, $515 mn is going in fines to the USA. This punishment is good for us as we own the RBS (and NatWest) preferred shares only, not the common. The prefs cannot be cashed out until the common share dividend is resumed, which looks increasingly unlikely. The punishment is also good for the struggling UK coalition govt which faced an election in one week's time. The program for privatizing RBS has been derailed, but the UK has a good excuse now: it was all because of the misdeeds of the former management which was allowed to misbehave by the Labour govt.

Drug Dealing

*Standpoint Research has bravely taken a stand on Th, arguing that Teva will winMylan and upping the Israel drug-maker to buy from hold, a 2-notch rise. I wish I were as certain of the outcome of the 3-way merger wave in the drug industry.

TEVA target MYL was turned down with its 3^rd bid for Perrigo at a claimed $232.23/sh because the Irish-based OTC-drug firm said the price reflected Teva's bid rather than what Mylan would command without it. Teva ceo Erez Vigodman wrote a letter to Mylan CEO Robert Coury among other things telling him to “stop mudslinging”. Vigomand argued that the takeover makes more sense than the chase after Perrigo for MYL shareholders. He said Teva is good at doing what it takes to get merger permissions from antitrust regulators (my worry about the merger). He reminded MYL that boardroom battles are not unique to Teva. And he claimed that the two firms have a good fit.

In fact, Vigodman is appealing over Coury's head to the half of the Dutch-registered board and the majority of shareholders who are independent. Half of the board which put out a long nasty note against Teva are Coury nominees.

A further insight into the battle came from an interview granted to Globes Israel by Eli Hurvitz, a member of the Teva founding family. Mr Hurvitz cited Coury's “emotional and personal and perhaps even nationalistic” dislike of Teva, confirming rumors I reported earlier that PA-bornCoury is of Lebanese Arab ancestry. Hurvitz also called the Israeli firm's long-time competitor's chief “uncouth” and “vitriolic”, citing his “Napoleon complex”, his “enormous ego”, and his fear of losing his private airplane. Mr. Hurvitz's remarks are clearly aimed at minority shareholders in Mylan and were published in English on the Globes website.

TEVA beat forecast as Q1 results showed a lower loss from the declining Copaxone multiple sclerosis franchise than expected. Total sales were virtually flat at $4.982 bn vs $5.001 bn. Without the impact of currencies, sales would have risen 8%.

Earnings hit $46 mn or 52 cents/sh, vs $744 mn or 87 cents a year earlier, down 23%. Excluding compensation related items (like stock options to its brass and sale of some product lines), EPS hit $1.36/sh vs $1.23 in Q1 2014, up 11%. Consensus forecasts were for earnings at $1.25/ADR and revenues of only $4.84 bn. So Teva beat.

TEVA made up for a 13.6% drop in overall Copaxone sales (by value) with generics, its original business, and also that of its target Mylan. Generic sales in the quarter rose 9.2% to $2.62 bn while specialty medicine sales (including the multiple sclerosis drug) fell 7% to $2 bn. Copaxone sales fell to $1.22 bn despite new 3x/wk formulations to try to keep MS patients on board, but some new branded respiratory drugs improved the total.

TEVA upped its full-year profit per share guidance from, $5-5.30 to $5.05-5.35.

What's not to like? Cash flow from operations in Q1 rose 50% from prior year mainly from higher accounts payable and lower legal settlements than in 2014. Free cash flow, excluding net capex nearly doubled to $1.2 bn, vs $700 mn a year before. This came from its cutting research spending from 2014 levels. Teva spent $23 mn less on R&D in the first quarter which may be why it is targeting R&D-focused Mylan. Teva Q1 generics R&D spending was only $215 mn vs $226 mn a year earlier; its speciality R&D spending was $215 mn vs $226 mn in Q1 2014. Its MS specific R&D spend did rise from $22 mn to $27 mn however.

*Novartis sub Sandoz has filed an ANDA with the US FDA for classic Copaxone and can roll it out to market as soon as the patent situation is cleared up by the Supreme Court. NVS.

*Novo Nordisk, the Danish diabetes powerhouse, reported a 24% rise in sales to 25.2 bn Danish kroner, Profits came in up 30% at DKK 9.88 bn ($1.47 bn). Moreover gross margins increased thanks to higher insurance reimbursements expected to continue, hitting 84.6% vs prico Q1 level of 83%. This led NVO to boost its financial guidance for the year by 17% based on expected exchange rates and by 7-9% based fixed currencies.

*Alkermes plc - Shane Cooke last week sold $1.26 mn worth of stock so I expected its Q1 to disappoint. It duly did. While revenues rose to $161.2 mn from year earlier $130 mn, ALKS GAAP loss hit $30.7 mn or 21 cents/sh vs year earlier loss of $24.4 mn or 17 cents/sh. Non-GAAP results were less horrible thanks to non-cash compensation to, among others, Pres. Cooke, with net gain $9.2 mn or 6 cents/sh vs prior year higher gain of $26.2 mn or 11 cents/sh. It beat analyst forecasts which called for bigger losses and lower sales than achieved.

Of course we do not own ALKS for its short-term results but for its expanding pipeline of central nervous system drugs starting with its long-acting schizophrenia drug to be launched this year pending FDA approvals. To quote CFO James Frate, Alkermes is “on the threshold of a next phase of growth”. In addition to the injected anti-psychosis schizophrenia jab, ALKS is also working on other CNS drugs against depression and multiple sclerosis.

Financing its R&D pushed operating expenses up to $188.5 mn from prior Q1 level of $146.1 mn.

Again there were some other bubbles of good news amidst the bad. ALKS's sale of its GA plant and its Meloxicom drug produced an up-front payment of $50 mn (to be counted only in Q2) plus up to $120 mn in milestones.

Moreover, Alkermes is gaining from its tax inversion move to the Auld Sod last year, why we bought in the first place. Its corporate tax bill in Q1 was only $500,000 vs a prior tax level when it was a US firm of $3.8 mn. Erin go braugh!

Other News

*Writing in www.seekingalpha.com, Pualo Santos joined the bullish camp on Tomra Systemsof Norway. He argues that the EU allegation of “abuse of a dominant market position” in bottle and can returns is a plus. He also thinks the weakening NKR against the dollar should result in a boost in profits. In my view the bottle and can returns business is no longer the driver at TMRAY which is developing a broad-range sorting business for pharma and food applications, building on its historic specialization in linking returns to the right bottler or canner for the refund. But Santos is one of the serious writers on SA.

*On Wednesday's conference call, Cameco CEO Tim Gitzel predicted a 5% rise in uranium sales this year. CCJ.

Fund Notes

*Africa Opportunity Fund fell to a new low Wednesday of 82 US cents per share which got investor juices flowing. It rose to 83.5 cents in London trading on Thursday and to 83 cents on the US pink sheets. AROFF should benefit from the eventual fall of the dollar in which much of Africa's debt is denominated along with its share price, and from the (fingers crossed) global recovery. This stock lost 1/3 of its value in the last year despite being upgraded to the London Stock Exchange fund listing, and despite doing a capital increase.

*With a month's lag, Western Emerging Markets Income Fund, EMD, on Thursday reported its holdings of March 31. It is 65% in sovereign debt (issued by countries rather than companies), plus some prefs and other debt. By country, its exposure is 14% to Mexico, its only double-digit risk. The other top 10 countries, in order, are Turkey, India, Russiar, Brazil, Colombia, Peru, Venezuela, Chile, and China.

*Fibra Uno is down 2.56% in Mexico trading today. I suspect this is in part a reaction to the US selloff on Wednesday, but probably also reflects how uncomfortable institutional investors feel with the family controlling this REIT, as I have reported. It can hardly be because of the opening of a spiffy new shopping mall in Aquascalientes! FASBF.

Brokers and Private Equity

*China Chaintek United Co., Ltd, the Chinese provider of logistics services to consumer goods manufacturers, on Thursday announced that the reference price for the its final scrip (share) dividend of 4 pence/sh was set at 49.6 p, the average of the market quotations for CTEK-AIM shares for 5 days after it went ex-dividend, 23 April. The stock has performed well.

This was the only London Alternative Investment Market share I kept after e-tradelast Sept. stopped trading on that market without warning. It is now signaling well in advance that it will stop trading in any foreign market starting this July. I cannot confirm if it will continue trading in Canada.

I am in the process of signing up with Interactive Brokers which may allow readers to automatically track my trades. I cannot firm this up until I get back to the USA. I think I will leave my IRA at e-trade just to annoy them.

A non-US reader, BC, has come up with several suggestions about where to move my brokerage account including 2 Singapore banks, which would not take a US citizen on. Earlier he suggested Interactive Broker where I have applied. Thanking BC, I wrote:

Their process for signing up is horrendous but I managed it. They have a copycat portfolio management system I will see about getting into. It would let me trade stocks not only for my own account but also for subscribers who want to join me. I am not sure how this will work under SEC rules as I am not a registered fund manager. So next week in NYC I will look into this option. Doing it from scary London would not work.

*Llewellyn-Consulting.com the firm of former OECD chief economist John Llewellyn, did not get a gig from Deutsche Bank or Pimco. But it announced the launch of Integrated Macro Mgm (IMM), a global jv investment manager firm. Llewellyn macro research from London will be invested by IMM along with established New York investment manager Lily Pond Capital Management LLC, run by Harold Kurz in NYC which will bear all investment, trading, and risk management in the US. Kurz like Llewellyn was employed by Lehman Brother before the 2009 collapse and then ran a hedge fund for 3 years. Now Lily Pond does private equity management. John confirmed that we will continue to get his firm's macro outlook opinions if published. His firm also does proprietary research.