Sunday the blog of Wall Street fund performance tracker Michael Lipper was quoted by a UK group, CityWire. He wrote that he thinks US portfolio managers and savvy investors are keeping their portfolios “frozen in place with very little” trading. Mike then set out to find out why with a round robin of calls to institutional investors, analysts, portfolio managers, NYSE specialists, trust lawyers, and a very successfully private global investor. What's up?

Lipper concluded that these Wall Street veterans are facing “a political/economic/market environment they had not seen before”. “And if you slice a securities analyst, a historian will bleed.” Here are some of the comments he quoted:

“Americans are losing faith in institutions and concerned about government intrusion.” As are Britons who voted for Brexit.

“Central banks' interest rate manipulation is not working.”

Lipper went on: “Market prices are above average with one exception. Price divided by free net cash flow is trading below average. Either the market is doubting the soundness of financial statements or suggesting that cash is less valuable than it was in the past. The latter view might suggest that other assets are more valuable than cash to both stock and company buyers.

“The former doub the quality of net free cash flow calculations because of the widening gap between price earnings ratios published and more conservatively constructed GAAP earnings according to strict accounting rules. (Ed: GAAP stands for generally accept accounting principles, the gold standard in accounts which many company override with non-GAAP reporting.)

“I learned that our brains are wired to use memory as a critical filter in making judgments. To all of us who served in the investment wars, our memory does not recognize the current situation. We are perplexed. When people are perplexed their action orientation tends to shut down until a somewhat familiar pathway is found.”

Lipper is former president of the NY Society for Security Analysts and was the founder and president of Lipper Analytical Services Inc. before he sold it.

This week is crunch time for central banks particularly in Japan and the USA. As I know nothing more than the rest of the world about how they will act, I am refraining from comment.

However, I think China's market rise yesterday was a one-off. Japanese markets are closed for a holiday and Samsung was sold off heavily in South Korea after the recall of its smartphone which risks catching fire.

To make up for last week when I was out of the country, we have a lot of news from yesterday including a company annual report and news from Argentina, Australia, Canada, Cayman Islands, China, Denmark, Germany, India, Ireland, Israel, Japan, Russia, Slovakia, South Africa, Sweden, and Switzerland.

*Alimentation Couche-Tarde (ANCUF) was retained as a best buy by Canada's Investment Reporter which analyzed the impact of its complex US$4.4 bn buy of Texan CST gas stations and highway shops and diners. IR likes the deal because it is friendly with both sides on board. They're Canadian and have to be nice, perhaps why ANCUF paid a 42% premium after CST put itself on sale. The mag also applauds that CST being paid for with cash rather than ANCUF shares.

Another factor is that the Canadians in the US will head for the facilities under the new Canadian management: snowbirds in the sun-belt and border hoppers in the US northeast. Being very big in Canada Couche is now moving across the 64'40 border here where it can combine purchasing and logistics with its Canada network. Yet another good thing is that selling some of its Canadian assets to Parkland of Alberta in a separate deal. This will raise $750 mn, reduce anti-trust concerns in Ottawa and also repay ANCUF debt.

Heavies

*Orocobre (OROCF ) of Australia, listed in Canada, operating in northwestern Argentina, reported full-year sales in FY 2015-6 (to June 30) fell 20% to US$15.53 mn, on which it generated a loss of $21.9 mn,nearly 26 times the prior year loss level. The main reason was a non-cash forex loss of $20.9 mn from the devaluation of the Argentine peso. A year earlier its Olaroz operations produced a $8.7 mn forex gain. It suffered a further $1.6 mn loss from an arbitration agreement with Rio Tinto Minerals, neither of which is likely to recur.

ORL-Toronto produces lithium carbonate and borax by brine evaporation in Jujuy Province in partnership with Toyota Tshusho of Japan and the province via a Singapore holding company, and without these partners in development sites in Jujuy and Salta provinces. It also produces borax solo.

It sells LI to battery makers Tesla, Foxconn, Samsung, LG, BYD, and others in Asia.

Lithium output has been growing since the 17,500 metric tonne plant went live early last year to supply global markets. As production ramps up the cash costs per tonne of output is expected to drop to $2500/tonne from current levels of $3555, already well below the level of half global lithium producer costs. Output in the prior FY was 126 tonnes. In H1 of the last fiscal. it rose to 1,600 tonnes, and in H2 to over 5,300 tonnes. The LI price has risen from $6000/tonne to double that level YTD. Forward sales are now at $10,000/T(net of commissions and logistic costs) for ORL for the Sept quarter as it has to honor earlier contracts as long as they run.

Orocobre is scoping studies may result in its boosting output from the current 17,500 tonnes level to 35,000 to 42,500 tonnes by scale up or lithium hydroxide production by hydrolysis (with Argentine-owned Italian firm Tenova SpA's Israeli sub-Bateman Advanced Tech), to be funded by existing financiers like Japan's Mizuho. Boron demand is also expected to rise for Latin agriculture and fiberglass growth.

We own OROCF (the ADR, which is hard to trade) because it produces lithium for batteries more cheaply than others, for which there is great demand, and as a turnaround play on Argentina.

*An Alerian report on the Montney easily-fracked siltstone bitumen and natural gas site north of Edmonton reveals that a midstream pipeline half owned by Veresen (FCGYF) (with Enbridge) to Chicago might be a way to eventually move the potential output of the huge undeveloped field to market.

*Abhimanyu Sisodia writes that Tata Motors (TTM) has created a $15 mn facility in Nagpur (India) to produce precision parts for its TAL aerospace arm. TTM also halted production of its Bolt hatchback car to focus on the Tiago.

*BAE Systems (BAESY) delivered its 250^th electronic warfare suite for the F-35 Lightening fighter plane from its Nashua (NH) plant. It provides offensive and defensive maneuvering options to the pilot and automatic self-protection to the plane, against surface and air threats. BAESY supplies one EW system per plane produced. As we reported last week it did not get the contract for the technologically advanced pilot helmets but is the sole supplier of EW systems.

However, chartists at www.investorsintelligence.com in Britain are aiming to close out their long position because it failed to exceed its earlier top and they are now bearish on BAE.

*The service has also gone bearish on CRH plc (CRH ), cement-makers from Ireland. Given that both Clinton and Trump plan hefty infrastructure spending if they win the White House, from CRH's largest market, the USA, I am not bearish.

*Analysts are in disarray about Agrium (AGU) over the Potash deal. It was upped to outperform from underperform by Credit Agricolewhile Bank of Montreal put it into neutral from outperform and BofA Merrill Lynch chopped it to underperform from buy.

*BP plc (BP) plans to freeze its level of CapEx over the next few years according to CEO Bob Dudley. It will instead work on a disciplined increase on efficiency. Charles Sizemore, a stock analyst writing in www.seekingalpha.com tips BP for its 12 forward p/e ratio compared to Exxon's 20x, and for yielding 7% vs XOM's 3.5%.

*Nevada incorporated geothermal systems maker Ormat Tech (ORA ) was subject of a presentation at the Money Show by Leo Fasciocco who edits the Ticker Tape Digest, who called it a trading play. No way. It was recently purchased in quantity byAmerican Century Utilities Fund investing in a sector with few growth shares. I own it and write about it because its largest shareholders are Israeli institutions and a family.

Pharmaceuticals

*Teva (TEVA) announced some statistically significant results from a phase II trial of pridopidine in early stage Huntington's disease which included improvement in total motor score, total functional capacity, and dystonia at 26 and 52 weeks. The drug has an unknown mode of action as a potent agonist of the Sigma 1 receptor in the genetic disease which killed Woody Guthrie. The improvement may be linked to greater mobility and ambulation, which in turn improved functional capacity like the ability to perform chores and activities of daily living, and managing finances (!) However, an unusually large placebo effect limited the determination of improvement in motor scores. TEVA's chief scientist, Dr Michael Hayden, has worked on Huntington's disease during most of his career. As Teva moved to launch phase III of the pridopidine drug at a Huntington Disease Network meeting in The Hague Sunday, it indicated that the results would be published in a learned journal, unnamed. Dr. Hayden said the “results provide us with clear insights into the approached to be taken in Phase 3. My hope is that this will provide the HD community with a medicine capable of slowing the progression of this devastating disease.

TEVA stock is down over the ambiguity of its results and also because of a NY lawsuit in by its Mexican acquisition target Rimsa(formally Representaciones y Investigaciones Medicas) for which it offered $2.3 bn last Oct. Two family members at the maker of drugs for emerging markets claim that the Israeli firm got cold feet and is attempting to wiggle out of the deal and get its money back. Teva argues that the accounts at Rimsa did not add up and accused the former owners of the Espinoza Abdala family of fraud, by failing to disclose differences between the manufacturing processes used in its plants and product registrations filed with regulators.

*EU experts have rated Novo Nordisk's (NVO) NovoRapid to treat juvenile diabetes positively, increasing the odds it will win a license from the Committee on Human Medical Products (CHMP) in ~2 months. Further, its semaglutide glucagon-like peptide-1 (GLP-1) weekly injected analog reduced the rates of patient suffering cardiovascular events like stroke or heart attack, or deaths by 26% to 39%. NVO's GLP-1 was added to standard care over 2 years in a trial enrolling 254 adults with type 2 diabetes at high risk. Results were presented at the recent European diabetes congress and published in the New England Journal of Medicine. NVO is a Danish diabetes specialist preparing for US FDA and CHMP filings for this drug.

In a Bloomberg interview, NVO international chief Maziar Doustdar predicted that its Tresiba insulin degludec and Ryzodeb combo of Tresiba with insulin as part would regain its market share in China once they are approved. Tresiba sales he said rose 167% in the year since it won US FDA approval and China is an even bigger potential diabetes market with sales up 10%/yr despite economic slowdown.

I bought more yesterday at $46.24. Its share price was called “overextended” by investorsintelligence.com last week.

*An analysis by EvaluatePharma predicts that Roche will beat Novartis for top spot in pharma sales, if marginally, by 2022. Its sales will hit $52.6 bn, showing 4% growth per year to then. NVS, sold, will have sales of $52.5 bn. We just bought RHHBY as its price fell into my buy range, after tipping it for a jab against Zika virus. Its multiple sclerosis drug, ocrelizumab, Ocrevus, beat standard Rebif in relapsing multiple sclerosis. It also beat placebo in primary progressive MS, the form of the disease now hardest to treat. Our FDA fast-tracked the drug. However, NVS is nipping at Roche's heels in this space too with a drug to cut MS disability risk.

*GlaxoSmithKline (GSK ) pledged at the UN annual meeting and the Clinton Global Initiative here to help address global health challenges by offering low-price immunization to refugees; addressing microbe resistance, and being prepared for future pandemics or public health threats. This is under GSK's “Global Goals” sustainable drug development commitments for 2030 health targets. The promises were made by retiring CEO Sir Andrew Witty.

*Benitec Biopharma (BNTC) of Australia reported results of a 24-week escalating phase I-II clinical trial of its TT-034 RNAi hepatitis C drug, the first one using recombinant DNA delivered intravenously via an adeno-associated closed virus capsid injection into humans. Once inside cells TT-034 expressed three independent short hairpin RNA sequences targeting the HCV genome. The patients all survived but so too did their hep C infection as TT-034 never was injected in a dose high enough to stop the hep C virus. The 9 patients aged 27 to 64 had failed on existing Hep C treatments or were treatment naïve. The study proved the safety of the system but not its efficacy. BNTC is now floundering about trying to turn its work toward hepatitis B treatments.

Tech

*According to regulatory filings, British fund manager Mondrian Investment Partners increased its stake in CAE of Canada 11.15% in Q2 by buying 1.54 mn shares of the maker of simulators for training airplane pilots and medicos. CAE stock rose 5.3% during this shopping spree. Mondrian owned 13.77 mn shares before the move and 15.3 mn after. CAE is up about 40% in US$ YTD. Mondrian which has over US$70 bn under management invests for about 200 ultra-high-net-worth clients. It sold ICICI Bank in India to practically zero to put the money into CAE. Its main investments are in fixed income rather than shares or options. CAE also upped its quarterly dividend by 6.7% in loonies to 32 Canadian cents/sh. This was a find by Patti the Biotech Maven whose son is a pilot trainee, not from me.

*South African Naspers is investing in classified ads aiming to overtake or overthrow Craigslist in the US market using systems it developed for Russia, India, and Brazil, called Letgo and OLX. CEO Bob van Dijk said the US ad system is “actually executed in a suboptimal way” and in a “very crowded market”, his firm wants to enter. (Source: Dow-Jones.)

*SAP is offering free access to developers of HANA(R) in a streamlined express and downloadable virtual machine version which can run in the cloud, on a PC, or on a server, along with flexible updates and access to tutorials, sample code, and community help. The target is smaller company data management of databases and analytics, a growth sector with a high developer demand. The developers can use the data source of their choice like SUSE or Red Hat Enterprise Linux, or Windows or Mac operating systems. SAP Hana(R) experience was identified as a top-paying skill in this year's Dice Salary Survey. The free download will be formally presented at SAP's Tech Ed conference held in Las Vegas (NV). SAP is German.

*Nokia (NOK ) has launched a private low-latency security application for enterprises running warehouses, factories, airports and transportation facilities, education campuses, and healthcare facilities to streamline their internal communication at a 1-centimeter level of accuracy to keep track of expensive equipment, wheelchairs, and other material. Security personnel will have mobile access to the network. It will also use video analytics to spot unusual activity. The Mobile Edge Computing system links up to legacy platforms using LTE spectrum and 4G as well as Wi-Fi. Later the Finnish firm will offer LTE via unlicensed spectrum using its Multi-Fire technology. The in-house system combines business-critical security with privacy protection, NOK says.

*Infosys (INFY) set up engineering services delivery centers in Croatia and Russia formerly run by French Alsthom. Divesting them was required for EU approval of the takeover by GE, writes Abhimanyu. INFY lost a 7th C-suite exec, Sanjay Purohit, blamed for slow consulting sales by CEO Vishal Sikka.

Funds

*The Patricia Industries part of Investor AB (IVSBF) of Sweden completed its takeover of Canadian medical tech firm Laborie from Audax Private Equity. Its sales to the end of Mar., its 2015-6 FY, were US$117 mn and reported cash flow $29 mn including non-recurrent expenses of $9 mn. It has grown sales organically in constant currencies over the past 2 years at 5%. For $640 mn, the Swedish group will own 97% of the firm with the rest from its management but plans to refund its equity spend with debt later. IVSBF is a holding company trading at a closed-end-fund-style discount, our way to go Nordic.

*Our Korea Fund's (KF ) largest stake, at 23% as of June 30, was in Samsung Electronics, which fell over 4% yesterday. KF also owns P&C insurer Samsung Fire & Marine, 4.3% of its holdings, which may have to pay out if its chaebol partner's smartphones start fires.

*Advent Global Convertible Securities & Income Fund II (AGC), drew more insider investment. Two new purchases by Saba Capital of the Cayman Islands took its stake to 14.32% of shares out. Tracy Maitland V and the fund itself each bought 43,000 shares, taking their stakes to 0.71% and 0.66% respectively. The fund proposes an in-kind sale of assets its holds to reduce the discount from NAV at which it trades. We cannot bid for the stakes but should gain from the cash generated being invested.

*CEO Martin Gilbert of Aberdeen Funds sold shares worth over $531 mn in the group which manages our FAX and FCO closed-end bond funds. It was heavily sold earlier this year as a specialist in emerging markets shares when they were unpopular. The Scottish chief exec probably is reacting to the recovery of the share since then. I briefly considered buying the fund manager but got wise and didn't.