The old certainties are falling fast. Mars bars and Snickers are being recalled in Europe because of contamination with plastic bits. The Great Trunk Road walked by Kipling's Kim, friend of all mankind has been blocked by an Indian caste who want to be treated as untouchables. Even the lessons of the 1930s about how to exit a depression are being revised.

The US will ask G20 countries meeting in Shanghai this weekend to use fiscal rather than monetary policy to increase global demand, a senior Treasury official told Reuters. American officials will urge G20 members to meet their commitment to refrain from manipulating exchange rates for competitive advantage. But to get around the obstacles to beggar-my-neighbor exchange rate fiddles in democratic countries you only need political mavericks heading for power. In the US, The Donald Trump. In Britain, The Boris Johnson.

Yesterday after Boris came out against Britain remaining in the EU, the pound sterling fell to a 7-year low. The pound fell another 0.4% against the dollar yesterday's morning.

The macro-economic advantage from Boris Johnson's call for British exit from the European Union, AKA Brexit, is sterling's decline. Cheaper pounds mean British firms can sell more goods and services outside the country. Sterling's decline also makes it harder for Britain to import stuff. Cheaper sterling will also push up the UK rate of inflation and boost GNP growth and employment.

Meanwhile good-guy governments listening to the US Treasury face problems meeting growth and inflation targets if they do not act to depreciate their currencies.

The British currency is declining because of uncertainty about Brexit and possible harm to the UK economy if Britain leaves the EU, but the impact on British stocks and bonds is mixed. The weaker currency fits the UK government goal of boosting inflation, employment, and growth. So far its 2% inflation target is way out of reach, while growth is feeble in Britain as elsewhere. Without having to break the rules by depreciating sterling, Britain is gaining a macro-economic advantage from Boris.

The Governor of the Bank of England, Mark Carney, now hints that British interest rates should be cut this year rather than increased. The base rate now is 0.5% but now it may be lowered because the economy needs more stimulus particularly because the global economy is falling. With Boris, Gov Carney doesn't need to cut rates to under zero as Japan, Denmark, Norway, and EU have done.

The other wild blond politician, Donald Trump, can impact the dollar similarly if he gets closer to winning the Republican nomination. Imagine what a Trump triumph would achieve in the US! The dollar would lose height for fear of the unfunded tax cuts and government measures he advocates.

As soon as he captures the nomination, a pre-election panic among companies exporting to the US would boost our imports and further undermine the Greenback. Mexico would ship 18 months worth of cars and chemicals to its northern neighbor. China would end the global shipping glut by sending 5 years worth of gizmos, appliances, cellphones, and garments in advance.

Mexican illegals would head for home while no Muslims would be allowed in so the housing price spiral will end, particularly in places which until now have appealed to Muslims and Chinese, like midtown Manhattan, where Trump lives. He will of course sell his pad in Trump Tower before the price collapses.

So under-educated American Trump voters would find jobs and more affordable homes. Many could raise avocados and melons to replace the imports from Mexico Trump would block. Others would sew shirts or make shoes in place of Chinese.

Rich people who wasted money on the latest hot Chinese mode in clothing, shoes or suits or phones would stick with last year's model at a bargain price. The rich would have to pay through the nose for dernier cri goods made in the USA. Everything imported would cost more, triggering inflation which we need along with certain raw materials we can only get from Mexico or China.

Then the war to force Mexico to build the “Rio Grande Wall” will revive defense spending. Fortress America would be strong and because of the military buildup, poorer. Nobody would be able to afford imported high-duty Frida Kahlo pictures or Ming vases which would be sold at a discount.

Once Trumpery had begun to bite, the dollar would lose more altitude, because increased domestic production would lead to shortages of workers. Former unemployed men and woman would demand and get higher wages, plus benefits like drugs and drink for those among them with addictions. This would increase the national cost of living (and lower everyone's quality of life, even that of the new hires.)

As more inflation hit, the dollar would cheapen further. Apart from Trump in Airforce One, only the Koch brother and Michael Bloomberg would be able to visit even the British home of devalued sterling.

Finance

*Zurich Insurance Group (ZURVY) plans to improve how it calculates risks after miscommunication among units aggravated losses from a port explosion in China last year, Chairman and acting Chief Executive Officer Tom de Swaan said. “There was accumulation of risk there, which was not sufficiently detected,” de Swaan said in an interview at Bloomberg headquarters in New York.

The largest Swiss insurer suffered $275 mn in losses from the explosion in Tianjin port which led to a decision to end the proposed takeover of Britan's RSA Insurance Group. Some units took on risks at the port without realizing that other parts of Zurich had already written similar policies. “Different information systems did not communicate well enough,” Swann said.

Zurich also decided to raise prices for risky customers and shake up management. De Swaan hired Assicurazioni Generali SpA’s Mario Greco to take over as Zurich’s next CEO in March. He replaces Martin Senn, who was retired last last year.

ZURVY stock was down rated by Berenberg from Buy to Hold yesterday on the revelations. SELL. Harry Geisel, our insurance maven, concurs, saying “years ago, Zurich was a really good pick. Look at them now. Not knowing how much risk they were underwriting!” I sold at $21.17.

*Bank of Nova Scotia (BNS) is planning to sell its Thanachart Bank stake in Thailand. Among the bidders is Bank of China. Scotiabank took a lead in building out its banking network in the Caribbean and Latin America but when it tried to replicate that success in Asia, it hit culture gaps. It also needs to raise money because it was a heavy lender to the Canadian energy sector.

*Sampo Oy (SAXPF), another Harry pick, declared a $1.19442/sh dividend payable to shareholders o record April 21 on May 18.

Drugs

*Viiv Healthcare announced some results from its Latte-2 phase II trials in yesterday's Boston retrovirus conference which treat HIV with weekly injectible cabotegravir from the GlaxoSmithKline (GSK) sub, and rilprivine from a Johnson & Johnson sub. The trials over different time frames, 4 or 8 weeks, showed that 4 weeks worked as well. Patients were enrolled before they had received any treatment and initially given 32 weeks of oral cabotegravir and two other viral suppressants. Then the combo was used to supplement their treatment. Serious side effects led some patients to leave and one patient died from an unrelated cause. The interim report will be followed by phase III trials starting later this year. HIV mutates so there is need for a regular pipeline of new drugs to treat it.

*South Korea is investigating Novartis (NVS) for kickbacks. The Swiss firm allegedly paid cash “rebates” and incentives to prescribing doctors. NVS in Basel confirmed that Seoul offices were visited yesterday but otherwise refused comment. In Japan, NVS was suspended last year for for misstating results and side-effects in documentation for its high-blood pressure drug Diovan in preventing strokes, and also for failing to keep its sales reps away from a leukemia drug trial.

*Benitec Biopharma (BNTCW) warrants have crashed while the stock has not traded yesterday. You can buy at 52 cents a share. I averaged down. BNTCW is down because its US underwriter, Maxim Group, is exiting. The Australian firm owns patents for DNA-directed RNA interference, but has dreadful management.

Making Things, Systems

*Zacks put a strong sell (5) on Agrium (AGU) earlier this week. This makes no sense even according to the Chicago momentum analysis group's own most recent report which reads: “Barring one-time items other than stock-based payment expense (post-tax) of $12 mn or 9 cents per share, Agrium’s adjusted [Q4] earnings came in at $1.43 per share, surpassing the Zacks Consensus Estimate of $1.40.

“For full-year 2015, net earnings from continuing operations were $988 mn ($6.98/sh), up 23.8% from $798 mn ($5.51/sh) in 2014. Agrium’s adjusted earnings for 2015 were $6.99 per share compared to $5.92 in 2014.
“Revenues decreased 11% year over year to $2.407 bn in the quarter. The top line also missed the Zacks Consensus Estimate of $2.927 bn by a wide margin.
“For full-year 2015, Agrium reported revenues of $14.795 bn, down 7.8% from the prior year.”

Some robot may have written up the results but another robot then decided to put an unexplained sell on AGU. It fell 74 cents in Canada yesterday but 92 cents in the USA, the reverse of what normally occurs. It is now $81.74 here. We like the coverage of Scotia Bank's Ben Isaacson who rates it buy as do 7 of the 9 brokers (mostly Canadian) who cover it. The other two are holds. Sales are being nipped by a delayed Indian monsoon but this will not prevent a sales boost this year.

*In India we own a car-maker and a software giant, Tata Motors (TTM) and Infosys (INFY). OnCNBC, Brian Jacobsen, chief Wells Fargo portfolio strategists, argues that the Fed won't raise rates more this year so people should “edge into” emerging markets. He likes India best. TTM, INFY.

*New contributor Dominick Fumai wrote up Cemex yesterday for Seekingalpha citing debt reduction and a return to profits before the target date, which led me to tip CX earlier this year. He also says “favorable US fundamentals should offset challenges in Mexican and Colombian markets.” Obviously not including a possible Trump victory. There are also important holdings in Europe and Asia as well. I like CX as a Mexican multinational likely to gain as the peso loses against foreign currencies. CX rose anther 5.8% yesterday in Mexican trading.

*Also I like Mexichem (MXCHF), another multinational which makes fluoride chemicals and pipelines.

*Ituran Location & Control, the Israeli firm which tracks rented cars to protect against theft and trucks to make sure their drivers are meeting hour limits, among other things, reports before the opening tomorrow. There is no consensus over earnings and sales, according to Interactive Brokers. That means the Israeli IT stock is not a crowded trade.

Mining

*Barrick Gold (ABX) yesterday revealed at its Investor Day that it is considering spending $2 bn (US) to develop operations in Nevada at Goldrush, Cortez, and Turquoise Ridge as well as in Lagunas Norte in Peru, starting in 2019. This follows about 5 years during which ABX slashed its assets to repay debt, including our US$ denominated bonds. It still owes about $9.8 bn after repaying $3 bn last year.

Reuters says that the NV project could turn out 440,000 oz of gold a year at an all-in cost of $665/oz. Canadian Mining Journal says Lagunas Norte would require the bulk of the money ABX projects possibly spending. Barrick again offered to buy back our 4.4% notes due at end Jan., 2021, cusip 06849RAF9 as part of a total repurchase of up to $750 mn, but they are not the highest priority, but only 5^th. The total of our bonds is US$1.35 bn, however, the biggest bond on offer. Barrick will pro rate the tenders. The bonds are now $97.75-98.46, below our cost basis, but up 2.76% yesterday.

*After jumping high yesterday in a risk-on day, Vale (VALE) fell back 3.6% so far, although the price of the iron ore it mines did not fall in tandem.

Fund Fundamentals

*Two directors bought 9000 shares of Pimco Dynamic Global Income Fund (PDI)