Trump's Kvittle

I will head for Britain in early June so my husband can vote in the June 8 poll. I had hopes of learning more about the Royal Bank of Scotland 2008 capital increase, over which over 9000 British individual and institutional investors in RBS were suing the bank and its ousted management. However over the weekend current management offered 80 pence in special compensation to those who had subscribed based on the misleading terms. This will of course further delay the eventual privatization of RBS (and Nat West C) by the UK Government. But we own the RBS non-cumulative preferreds, and we like the delay because Her Majesty is standing behind our prefs.

The Trump dump which started last week in stocks is continuing in currency markets. The Greenback is off 0.93% in euros; 0.78% in sterling; 0.65% in loonies and Mexican pesos; and the Israeli shekel hit at a 3-yr high in dollars as Pres. Trump flew in. I am trying to guess what he wrote on the slip of paper he put into the cracks on the Wailing Wall, as the first US President to visit the site while in office. I wonder what he wrote on his "Kvittle"?

The President should not be blamed for all the fall in our currency, because even before he hit the scene the US$ was up way over trend, and near its 1985 peak. To revive industry, as Trump proposes, he needs a cheaper currency.

This is of course good news for those who are into foreign shares, especially ones which are not linked to dollar earnings. We typically invest abroad without currency hedges. You can see the divergence most clearly in the market to our north, in Canada, which is most roiled by the impact of US$ forex moves. We discuss the currency trend there and also examine news from Israel, Australia, Argentina, Chile, South Africa, Mexico, Brazil, Japan, Hong Kong, India, Ireland, Sweden, Britain, Switzerland, Spain, and Cuba.

O Canada!

*Computer Modelling (CMDXF) lost 4.44% yesterday in pre-market trading in Canada after it posted Q4 and full-yr results after Friday's close. The hydrocarbons reservoir simulation firm Q4 earnings came in below forecasts at 7 cents/sh on sales which were up 0.03% to C$19.058 mn. Its unadjusted Q4 earnings were minus C$24.6 mn but reflected one-offs. Its full year revenues fell by 10% mainly because of problems in Venezuela and Canada, to C$75.1 bn, so its growth in Asia and the Middle East and flat US business was insufficient to overcome this. G&A spend by 7% and lowered staffing levels. Contracts with oil explorers in emerging markets in particular are lumpy from quarter to quarter and include deferred revenue on contracts in force.

Its EPS for the quarter came in at 7 cents vs 5 cents the year before and for the full-year to 31 cents from 32 cents. Its cash flow (earnings before interest, taxes, depreciation, and amortization) remains at 46% of revenues and its annual dividend is flat at 40 loony cents.

During the FY the company improved its simulators by allowing its customers to run parallel network computers to speed up its reservoir recovery projects. It also replaced its ended contract with Petrobras with a new 5-yr R&D contract for its “co-flow” technology with Shell and it is promoting licensing the system with other oil companies. IIts cash on hand topped C$63.2 mn, which CMDXF expects will be boosted in the next fiscal year by lower CoFlow spend.

Since Computer Modelling reports in loonies and mostly earns US$s from oil explorers, it is hurt by a lower Greenback, the big development of last week.

*S&P Capital IQ rated Algonquin Power & Utility (AQUNF) a fast grower justifying its high p/e and AQN stock gained 1.7%. Its p/e ratio is 19 but it is growing 21% and pays a dividend of 6.4%, nice money.

*On Friday, Bank of Nova Scotia (BKSHF) was the best performer in Toronto gaining 1.4% to C$75.48. BNS rose another 0.16% yesterday. It will report May 30 on its Q2. It is the Big 5 Canada bank with the least US$ business.

*Alimentation Couche-Tard, an earner of US$s, is nonetheless up 4.65% today. We sold ANCUF for fear of the vicious battle between convenience stores in the US market.

*However Pure Technologies, another fast-grower with a high p/e ratio, was down yesterday. PPEHF checks on the integrity of pipelines carrying water and sewage and earns a lot of money in the USA.

Heavy Industry

*Delek Group (DLKGF) continues its rise, up another 2.5% yesterday. It is developing the Leviathan gasfield offshore Israel and is planning a UK ipo.

*Australian markets were upbeat yesterday and one of the gainers is Orocobre, which took on 6.5%. OROCF which mines in Argentina was not followed by SoQuiMiCh which mines for lithium across the border in Chile.

*I crowed too soon. Cosan (CZZfell back 3.5% yesterday on continued worry about impeachment of Pres. Temer.

*And VALE, which I have been selling, gained 1.1% yesterday.

*However Kubota rose sharply yesterday along with the Tokyo index. KUBTY makes construction equipment sold globally; it gains from a lower Greenback as the yen has barely gained in the dollar debacle of the past few days.


*Aberdeen Chile Fund (CH) is up 0.77% over its currency. The central bank cut interest rates by 0.25% to 2.5%. Lower interest rates may boost growth.

*Canadian General Fund (CGRIF) is also up on currency factors, gaining 2.1%.

*Ditto for Herzfeld Caribbean (CUBA).

*And for Mexican Equity & Income Fund (MXE).


*Tencent Holdings (TCTZF) rose another 4.7% in Hong Kong trading yesterday. It is up only 2.3% on Wall St.

*Its part parent Naspers (NPSNY) was dropped for commercial reasons from ratings by Fitch in London yesterday. Its global expansion in e-commerce appeals but unfortunately its main business of video in South Africa and southern Africa are under pressure.

*Vodafone (VOD) gained another 1.9% in UK trading yesterday. It is up 2.1% on Wall St.


*Revelation that its US subprime auto loan arm did not verify the income of those it was lending to zapped the stock price of Spain's Santander and helps explain its loan losses. SAN only verified 91% of its car loand vs a typical lender like GM verifying 99%, according to Moody's. The long arm of its Spanish parent failed to check that borrowers could afford the payments on its car loans.The risk is not only that it will not be repaid; it is also that borrowers can sue the bank for being too generous, as has already begun in the US mortgage business and has hit SAN over car loans based on misstated income in Massachusetts and Delaware. Another 30 US states are contemplating doing the same

*Ford (F) sacking its CEO made Tata Motors look good, and it gained 1.5%. TTM bought out Jaguar Landrover from Ford, a basis for Ratan Tata's reputation.

*Columbine Capital downgraded Autoliv to neutral from favorable yesterday. ALV of Sweden rose 1.5%


The Administration will turn its attention to healthcare when the President returns from his trip abroad. But the way forward is unclear and there will be delays. This is good news for pharma stocks. But the drug business has to deal with bad news from trials of new products.

*Shire's (SHPGhemophilia A drug SHP656 failed its weekly dosing trial for polysialic acid but the Irish firm expects that it will proceed with other tests as it learned things from the failure of its collaboration with Xenetic.

*GlaxoSmithKline (GSK) reported data from its Nucala (mepolizumab) in severe asthma via a poster at the American Thoracic Society conference showing improved lung function and quality of life in patients with blood eosinophil levels of over 150 cell/µL. Nucala is an injected biologic which binds to the receptor on signaling protein IL-5, which cuts eosinophil levels.

*Swiss Roche Group is funding a phase 1b trial combining its Tecentriq (atezolizumab) with BL-8040 from Bioline Rx (BLRX of Israel) in treating patients with acute myeloid leukemia who achieved complete response with induction therapy. BL-8040 is a stem-cell mobilizer of immune and tumor cells which indices tumor cell death which may work in minimal residual disease to prolong remission. Brokers Maxim Group, according to Barron's, think BLRX can triple its price to $3 if BL-8040 works in leukemia. It will also launch a phase III program for multiple myeloma in pateints who had a autologous stem cell transplant by 2019. It is also being studied with Keytruda in pancreatic cancer and the broker called it “a pivotal company” and “a buy.” BLRX rose 1.6% yesterday. I am buying it.

*Hope springs eternal. Benitec Biopharma and its warrants rose 6.4% and 18.1% yesterday. It is Australian. BNTC and BNTCW are gaining from presentations on its ARVO ocular and another on CAR-T silencing, neither of which is news. It has been invested in by NantWorks, the firm of US billionaire doctor Patrick Soon-Shiong.

*TEVA is back in the dumps however, despite the arrival in Israel of Pres. Trump.

*Israeli Compugen (CGEN) is up 3.2% despite very bearish brokerage views. It next reports Aug. 1 on Q2.

Oops. I mistook the CFO at Input Capital (INPCF) for the CEO in reported Martin Ferera's correspondence with the company. Sorry, but I suspect they will forgive me as they work closely together and both invested more in INPCF recently. Brad Farquhar is the CFO not the CEO who is Doug Emsley. The latter explained market streaming.

Disclosure: None.

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