Trump Triumphs

I am still rubbing my eyes after my husband woke me to tell me the election results.

For the first time in my life I understand how my parents and grandparents must have felt in 1933 when the Nazis won the German Reichstag election. I feel I have lost my country.

Of course Trump is not an anti-Semite, with an Orthodox Jewish son-in-law, Jared Kushner, married to future first daughter Ivanka, who converted. But he tolerated David Duke and his ilk supporting his candidacy. Moreover, Trump has never come out in favor of a dictatorship ending future elections. Hitler spelled it out in Mein Kampf.

But so many of the things he pledged to do go against my prejudices and positions:

tearing up Nafta and the various Pacific Rim and pending trade agreements pending to impose protectionism;

tearing up the deal to denuclearize Iran;

repealing Dodd-Frank and other regulation of banks;

ending Obamacare, the singular achievement of the current president;

building a wall to stop Mexicans crossing the border;

hyper-vetting or banning Muslim immigrants;

returning to dirty coal and dirty electric generation because global warming is a 'hoax' and cutting US global warming payments to the UN;

making abortion illegal again (I belong to Planned Parenthood);

charging Nato and Pacific allies for US military support or not providing them with security;

tackling China for allegedly manipulating its currency downward (which happened today because of his threats, not manipulation);

palling up with Putin;

not repaying debt the US owes;

not observing the mutual assured destruction rules applying to countries having nuclear weapons; gutting the independence of the Federal Reserve;

unilaterally imposing tariffs and making trade war on countries supposedly taking advantage of the US; removing obstacles to mergers;

torturing suspects of terrorism and killing their families (I am a member of Amnesty International);

and deporting 1 million illegals and undocumented immigrants (I am a first generation American married to a foreigner.)

He also frightened Wall Street with potentially inflationary plans to cutting taxes on individual and corporate filers and on firms repatriating money held abroad. At the same time he wants to increase increasing infrastructure investment by a trillion bucks. Where will the money come from? The global financial system will be destabilized. Moreover with control of both houses of Congress, President Trump can get his programs through. There will be US growth, but at a cost.

I suspect he will not follow through on the “London Bridge is falling down” theme of “take a key and lock her up.” Hillary Clinton will not be jailed for her sins. And if he groped womens' private parts in the past, at age 70 with an absolutely gorgeous wife (I saw Melania in the flesh for the first time at the polls yesterday) I think he will control himself better than Bill Clinton did. I also think he may reward the FBI head Comey with a key cabinet post, for the singular best help for the Trump Triumph.

Once again, Irish bookie Paddy Power plc (PDYPF) got the voting outcome wrong and paid out on bets on Clinton early when the polls seemed to show that she was well ahead. We sold PDYPF, listed in London, mainly because it was hard to track as US brokers disliked its offering spread betting on shares and blocked its ADR market-maker as a 'sin' stock. Paddy also called the odds on Brexit wrong.

Now for the mop up. Banks, pharmaceutical and biotech stocks, gold, raw materials, and the yen are up. Mexican stocks and the peso are way down but not as way down as they were overnight. The Nikkei feel 5.4% overnight, the dollar dived, the gold price soared. Japanese stocks fell. Treasury bonds are down. The FTSE index in London fell 200 points at the opening.

More about our stock picks from Britain, Israel, Ireland, Canada, Denmark, Switzerland, and many other corners of the globe plus an update on our main hedge against Trump follows for paid subscribers, including, of all things, a company quarterly report. I am looking forward to getting away from my desk to have my teeth cleaned by a Putin supporter born in Rostov-on-Don, to be followed tonight by a party for locals from Sutton Place. We have two buys today.


*While US pharma was up on removal of the Clinton price control threat, there was plenty of oomph also in foreign drug stocks, Israeli Teva back over $40, up 3.3% here after taking a gain of 10.4% in Israeli trading. Dane Novo-Nordisk (NVO), up 2.4%, Swiss Roche (RHHBY), up 4.3%; Irish Alkermes, (ALKS), a likely repatriater, shot up 6.3%; GlaxoSmithKline (GSK) up 2.6% in London. Lamentable Benitec Biopharma (BNTC), the oddball Australian, fell.

*The reporting company today was another Dane, Bavarian Nordic (BVNKF), which is a key supplier to our Pentagon, a relationship whose future is uncertain given Trump's distaste for foreigners and defense, although I expect both will prevail. It reported in DKK on its 9 mo results converting into US$s at what is now a stale exchange rate of 6.68 per dollar (the rate on Sept. 30 when it closed Q3) . Revenues came in at $88 mn (DKK 591 mn) vs prior year $105 mn (DKK 703 mn) because of lumpy contracts. Before tax earnings went negative to minus $12 mn (DKK 12 mn) from zero last year. EPS is too hard to work out because of a new private placement earlier this year.

However, by subtraction, I was able to work out the DKK figures for Q3. Revenues were DKK 452 mn vs prior year DKK 234 mn, a nice pop. Profits before taxes in Q3 last year came to minus DKK 147.5 mn and this year to only minus DKK 23 mn in the quarter. I think this kind of reporting is appalling.

Offsetting the reticence, Bavarian expects however to book 40% of the revenues it anticipates for 2016 in the current quarter. BVNKF also has upped its cash preparedness because of its April stock placement and now says it is at $284 mn (DKK 1.9 bn).

BVNKF in engaged in costly phase II and III trials of its Prostvac with ipilumubab against localized prostate cancer and it is a supplier to Bristol Myers for the Opdivo and Prostvac trials. BMY will market the prostate cancer jab under a contract with Bavarian. It is developing an Ebola vaccine in partnership with a sub of Johnson & Johnson (JNJ). Its main specialization if a non-replicating smallpox jab which can be used to inoculate populations which cannot get the regular vaccination (like those with HIV and others with immune deficiencies.) It has a human papilloma virus which is recommended even if it is not like to immunized pre-puberty girls and boys.

All this is undermined by a quirky, impenetrable, and irritating policy of reporting results.


*The peso dropped as much as 13%, an all time low at one point overnight before correcting to be only down ~9% to 19.9623 to the dollar, just under the key 20:1 ratio after earlier falling to as little as 20.7 to the US dollar and then recovering to 19.8 before falling again.

Eduardo Garcia writes from Mexico City that the country's monetary and financial authorities called a press conference to announce a plan to intervene on the forex markets. Pres. Enrique Peño Nieto called an extraordinary meeting at Los Pinos (their White House) to work on strategy.

He stupidly acted as a host and facilitator of Trump during the campaign and this hurt his standing locally. However, now Peño Nieto has chips he can call in. Mexican Equity & Income fund dropped briefly below $9.90 before getting back over $10 in early US trading

In UK trading Fibra Uno (FBASF), fell by 6.92%. It trades there as FUNO11.

Max El-Mann, who is managing director of the El-Mann family firm which runs the REIT as well as of FBASF, yesterday announced a program to invest 30 billion pesos (about $1.6 bn) over the next few years by creating industrial parks for e-companies and others in Mexico City areas, equipped with shopping facilities. By 2018, the group, including the family and our REIT, will invest NMP 26.1 bn in the Mexico City suburbs, about $1.4 bn.

El-Mann was speaking at the opening of a new FBASF Pepsi Cola distribution site in Chuautitlan Izcalli, a suburb, which Eduardo attended. This is part of the plan to buy 18 properties for NMP 14.3 bn ($770 mn) announced earlier this autumn, but is quite an upgrade, amounting to a near doubling of the amount raised at the ipo of the first Mexican REIT.

I think it is a buy today. Indian, German, and Hong Kong Internet and support firms are down because Mexico now can compete harder. If you want a hint on how good Mexicans are at math look at the Inca Calendar.

*Mexico's Cemex (CX), fell in double digits here, penalized for being from Mexico, but recovered a bit as the infrastructure boost crossed the Rio Grande. BofA-Merrill added CX to its buy list. More cement below.

Green Stocks

*Tomra Systems (TMRAF) is quoted here for the 1st time in ages, and the Norwegian maker of reverse vending machine and drug sorting systems is down for being green.

*Also penalized for being green is Tata Motors (TTM of India) which today launched an LNG-powdered bus, according to Abhimanyu Sidodia. I now cannot open his file so this will have to do.

*Clean energy related stocks crashed, notably Brazilians, with Cosan (CZZ) down over 7.8% to $7.88 (CZZ) because Pres. Trump is expected to cut subsidies for clean energy. The Brazilian firm makes ethylene from sugar cane waste (begasse) and will not be able to fight Iowa corn

Raw Materials

*Having failed to make volatility plays work in my private account, I opted to use gold to protect against uncertainty. The SPDR gold ETF (GLD), rose 2.2% and gold mining shares did better still. Barrick Gold (ABX) gained 3.4%.

*Orocobre (OROCF) after its leap yesterday is down 6.7% today. It mines lithium for batteries running clean energy. OROCF or ORL-Toronto for the Australian. Australia fell overnight and hasn't recovered yet but this is not the right Oz energy play.

* US-traded energy stocks are all over the map, with Computer Modelling (CMDXF of Canada) down 8.7%; Ecopetrol (EC of Colombia) off 0.34%; Veresen up minimally (FCGYF up minimally); Dutch Antilles Schlumberger Ltd (SLB) up fractionally.

*VALE was up 4.2% in Brazil and briefly hit $8 here on intimations that it will gain from more US demand for iron ore to build our infrastructure and China's. VALE is also Brazilian. Its prefs rose 1.8%.

*Irish CRH plc (CRH), a likely beneficiary of Trumpian building rose 6.9%.


*US banks are up but foreign ones are suffering, with Santander (SC) off as much as 4% at one point in Spain. Also off are Latin American lenders like Banco Latinoamericano de Comercio (BLXand Canadian Bank of Nova Scotia (BKSHF), Scotiabank, BLX of Panama and BNS of Canada.

*However insurance firms are up like Sampo Oy (SAXPF)Allianz (ALIZF), and Validus Hldgs (VRare up. They are from Finland, Germany and Bermuda resp.

Defensive Defence

*BAE Systems (BAESYis eligible for as much as $.14 trillion in work on repairing a new generation of F-35 stealth bombers for the US Defense Dept. The Financial Times yesterday reported that Britain will get to serve as the primary support for the highest value components with BAESY the major beneficiary and the local arm o fNorthrup Grumman the second. Another bunch of contracts will go to The Netherlands and Australia. All this of course supposes that Nato remains active. l AE CEO Ian King called the DoD deal “recognition of the advanced military support skills and capabilities we have.” BAESY gained over 7% today in US trading on the pink sheets. If it falls back buy more.

A Republican controlled Congress will not let Pres. Trump cut defense spending. And having been supported by Pres. Putin, Trump will have to stick with Nato.

Disclosure: None.

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