Led by Betsy Warren, the protectionist Pasionara of the Senate, a disgrace to the Harvard Law School, Democrats have blocked fast-track authority the Administration sought in order to complete negotiations for the trade-freeing Trans-Pacific Partnership, TPP. This probably will also keep back the Transatlantic Trade and Investment Partnership, or TTIP, also requiring fast-track. Fast track has been used by all multilateral trade negotiations in my lifetime. It allows negotiators to strike a deal which legislators cannot unpick to remove details they do not like. They have to vote up or down on the whole treaty.

Another bill, also opposed by Sen. Warren, would give the government a generic “Trade Promotion Authority” which would apply to both deals which she claims would allow a future Republican Administration to remove the financial regulations passed since the global financial crisis by putting Dodd-Frank reform elimination into a trade bill which could not be fillibustered in Congress.

​T​o believe that you have to believe that Republicans are demonic despots. I am ashamed to admit that I donated to Prof. Warren's Senate campaign out of collegial and female solidarity. I will not donate to her again. Pres. Obama stated yesterday that her arguments “don't stand the test of fact and scrutiny” adding that she's being “a politician like everyone else.” She is “absolutely wrong.” I side with the President even if he did not teach at Harvard and even if he is a male.

There is nothing particularly left-wing about protectionism. But as US union leaders try to rally their beleaguered and diminishing members, holding back foreign imports sounds like a good platform. It isn't. It is a stupid idea.

First of all, union members benefit from imports of goods the US no longer can produce economically. Countries, ours included, cannot be self-sufficient in all products. Countries at different levels of development with different natural resources should specialize.

In an interconnected world, the price of American-made goods has been made uncompetitive because the US market no longer has the necessary volume to cheaply produce building materials, shoes and clothing, furniture and fittings, electronics, household gizmos, bobby pins and eyeglass frames, whatever. The US worker gets imports of these things at low prices and would be able to afford still more if new trade talks cut tariffs further.

Another feature of all “fast-track” systems is domestic US help to adjust our economy and workforce for jobs lost because of trade flows. Even with high duty, some US factories will shut down. Their employees get help finding new jobs or learning new skills under trade agreements. This is a long-term solution; tariffs are short-term.

In traded goods, the TPP aims to globalize labor policies, to prevent sweatshops and child workers, something US unions (many of which have “International” as part of their names) cannot seriously oppose. The TPP also wants to require high environmental standards at foreign factories, another thing which union members (all of whom breath) should give their backing to

The US runs a trade deficit in merchandise which translates into lower prices for American shoppers buying foreign goods. We make up for this with a surplus in capital flows, not just investments, but also financial flows and royalties. Improved rules would actually boost these flows, economists say.

Lowering tariffs and closer integration also would apply to what the US does best, that which we export, be it intellectual property (like software and pharmaceuticals) or financial services. A key plank in the TPP would be lower tariffs on US food crops which are kept out of countries like Japan, Malaysia, and Vietnam. It would also end favoritism for domestic manufacturers using local commodities in countries like Indonesia.

The TPP also aims not just to make the rules fairer, but to make them visible so exporters know what they are up against. This will also highlight some tricks countries engage in, like Japanese and Thai rice buying bodies or India's state and local tariffs. Bringing countries closer together in trade will also provide the US with diplomatic benefits in keeping down the pressure from the aggressive Pacific country which is not part of TTP: China. Despite or perhaps because of continued economic growth slacking, the PRC is claiming control of resources in the South China Sea where many TTP countries are under threat. Meanwhile monetary easing in China to spur flagging growth will increase the global edge Chinese goods get by pushing down interest rates and the Renminbi. However, the only currency losing value faster than the RMB is... the greenback dollar!

The TTIP, meanwhile, will grapple with silly European blockages against genetically modified organisms in food they import. Instead they will get labeling with enforcement, surely a better alternative. Again the benefits in confronting Russia should help convince our Solons that these talks are in the US national interest not only in balance of payments, but also in diplomacy.

While I admit this is not of interest to US lefties or a Union Maid​, the TTIP negotiations will also provide shareholder protection, which we need as global investors.

Today we have news and results from Britain, Colombia, Israel, Canada, India, Mexico, Belgium, Brazil, Norway, Chile, Finland, South Africa, and Germany.

Merchandise Makers

*Renishaw (LSE-RSW) the UK engineering works, saw its 2014-5 FY Q3 pre-tax profits jump a remarkable 369% over last year to £53.2 mn ($83.4 mn) in the March quarter. Revenues in the same period were up 73% to £145.9 mn, boosted by strong sales in Asia, up 124% in the past 9 months and 90% in the last half year. This came from organic growth linked to new products from Apple for whose contract manufacturers it provides precision measurement and calibration tools. RNSHF equipment is used to make iPhones and now watches. (I am giving its grey market symbol because my shares have been moved by e-trade into my regular account rather than being in the global-trading one, and the new symbol, not provided by e-trade, is how I currently access my account, pending the ACATS. E-trade shows Renishaw as #R251490 which is a useless ticker symbol, yet another reason to move on.)

RSW also reiterated its full FY net profit targets raised 3 times last year to £110 mn. The share rose 3.6% in London today and is up 28% YTD. It was tipped by Martin Ferera who called it “a stock to hold forever.” He also said it was the best way to play AAPL.

*The Q1 report today from Ecopetrol (EC) was barely positive. Its sales fell 31.6% because of lower oil and gas prices to 12.3 bn Colombian pesos on which consolidated net IFRS income came in at COP 160 bn, off (hold your hat) 95.9%. Since the peso fell ~20% in the past year the dollar-denominated income was a greater wipeout. Cash-flow margin (margin on earnings before interest, taxes, depreciation, and amortization) was 25.6% vs prior year's 43.8%. EC, which is state-controlled, exists to sell oil and gas from Colombia. Its CEO, Juan Carlos Echeverry, patted himself on the back for having produced positive results at all, a better Q1 sequentially from Q4 2014. He noted that March was even better that Jan and Feb. EC had positive results from new drilling off the Atlantic coast at San Jacinto along with offshore sells coming on the Caribbean (in partnership with Anadarko). However, production in Q1 was virtually flat from last year at 773.4 mn barrels of oil equivalent/day despite new facilities.

Like other oil producers, EC sought alternative sources of profit, in its case also refining margin boosts. This came of $18.2/bbl in Q1, up 12% y/y and 15% sequentially from Q4. Moreover the throughput in native pipelines went up 6% because guerillas are not attacking them as often. There were 2 infrastructure attacks this Q1 vs 35 a year earlier.

Also hurting EC was the application of a new Colombian wealth tax which boosted operating costs by over 50%. Both of these are one-offs, but they did zap margins and profitability. The share lost over 6% this morning

*Israel may end the quota on natural gas exports to Jordan, according to website www.globesisrael.com 

This was revealed by its partner, Noble Energy, the operator of Israeli offshore gas field, but also would apply to our Delek Group (DGRLY). After an initial contract was signed with energy-short Jordan last year, it was thrown into confusion by the antitrust authority last Dec. 26 and Jordan said it would buy Gaza gas from the Hamas-controlled offshore field instead. Now Israel is working hard to get back this strategically important business. Its Knesset (parliament) earlier tried to limit exports of gas to keep prices in Israel down.The result of all this fiddling, which was related to the election, is that Israel faces a gas supply glut in the short-term. A compromise on marketing has also been presented to both NBL and DGRLY but it is unclear if it will by-pass the Israeli trustbusters.

*Mexichem (MXCHF) sub Dura-Line inaugurated a new plastic tube plant in Hyderabad, India to serve water, gas, and telecom pipe needs, its 4^th facility in India. This Mexican firm is becoming a global full-line producer of PVC and fluoride with a full chain starting with mining the raw materials, chloride and fluorine. 

*A report by Marine Harvest Group SA (MHG) says that its likely insurance proceeds from the damage to its on- and offshore fish hatcheries in southern Chile will exceed the book value of the damage. The Norwegian salmon giant MHG had to shut down the hatcheries because of the emergency which will kill millions of fry and eggs and 3,700 broodstock but it plans to eventually replace them. It has two other sites in Chile which have not been affected. MHG is up 5.4% on the news and, to quote Harry Geisel, “that's not smoked salmon!”

*Fear of a bad monsoon has hit London-HQ'd Vedanta Resources Plc's UK-listed India sub, Vedanta Ltd today. We own the NYSE-listed VEDL ADR. Its new power ceo Ajay Dixit took over its former Cairn sub which produces oil and gas offshore Rajasthan. The mining-energy group is our former Sesa Sterlite (SSLT), renamed and re-tickered. It is in the iron ore business, energy, nickel, zinc, lead, copper, aluminum, silver and other materials in India, Southern Africa, Ireland, Tasmania (Australia), Sri Lanka, Namibia, Liberia and a few other sites and belongs to Anil Agrawal.

*Macquarie downrated Vale (VALE) to neutral from outperform today. It is off nearly 3%. The theory is that it is further from China than other iron ore giants like Rio Tintoand BHP. The flip side is that the A$ is rising and the Brazilian real is falling along with fuel costs. And dry bulk carriers can sail slowly to use less fuel over longer distances than short ones.

Service Suppliers

*Sampo Oji (SAXPF) , the Finnish insurance firm, saw Q1 net rise 23% to euros 435 mn thanks to premium income up 5% and bigger profits from its 21% holding in bank Nordeaof Sweden. Its net asset value/sh, a metric Finns like, went up 3% y/y to euros 27.02 at end Mar.

This is ~$30 and the stock is under $25. This enabled SAXPF to avoid the fate of other insurers like Allianz and Zurich. Sampo kept it combined ratio, the key insurance metric for us at 95% and it forecast this will close the year at 88-91% excluding certain pension reforms. Property & Casualty combined ratio will be brought down to 95% this year from 89.2 % in Q1. Last year's Q1 ratio was 90.3%. This is the largest part of SAXPF's business.The combined ratio takes the total of incurred losses and expenses as a percentage of earnings from premiums and investments. Lower is better but anything below 100% is good.

The challenge will be to keep up investment revenues in the current sub-zero environment for fixed income in euro-land. Luckily Sampo operates also in other countries where normal returns can be gathered, like Russia. SAXPF rose 1% today. It also yields 4.3%. Another Harry stock.

*South African media group Naspers (NPSNY) is up not only in sympathy with China's Tencent, but because of homeland developments. Mounting scandals over Pres. Jacob Zuma's palatial home extension spending (paid from the govt budget) have turned ANC supporters against his party. A new African head of the Democratic Alliance has boosted its appeal. When politics get interesting people buy media. NPSNY produces media and ads on media.

*Vodafone (VOD) reports May 19. Consensus average Dow Jones forecasts are that revenues will rise 9.4% over last year to £41.9 bn on which earnings will fall 29% to £1,453 bn, and eps fall 27% to £5.50. Last year's numbers were boosted by the sale of VOD's stake in Verizon Wireless. Most analysts are positive (11 out of 12 polled) with a target price of GB pence 254.4.

*Galapagos (GLPGF) tomorrow will do its ipo at $42.43/sh which applies also to our existing shares of GLPGF and its euroland traded stock, GLPYY. There will be 4.7 mn new shares on Nasdaq post-offer on Friday, plus a likely greenshoe optioon. Its offering, from Morgan Stanley, the lead mgr, stressed its potential in therapies for rheumatoid arthritis and cystic fibrosis. The Belgian firm opted to ipo and raise capital to forestall takeover bids expected from its research partners including Johnson & Johnson, AbbVie and GSK. It will have ticker symbol GLPG-Q. As I am moving my account I will find out about a conversion after it is done.

*HSBC downrated Infosys (INFY) with other India shares popular with foreign investorstoday. INFY shares fell 2% in Bombay.

*Barron's Asia blog tipped L'Occitane en Provence (LCCTF) last week in an article starting: “Pamper your portfolio with L'Occitane”. The Luxembourgeois-incorporated stock is up nicely, by over 7% today. I think it may be that Dow-Jones publicized last week's article (but not to me.). We own LCCTF which is now $2.89 bid $3.16 ask, one reason we bought in Hong Kong in early 2014 rather than getting the ADR. I paid US$1.72 for HK:0973 when global trading was still allowed in my account, and then converted to the pink sheet ADR. Beyond its name, L'Occitane has little to do with Provence, the south of France, beyond marketing and sourcing some of its supposed organic scents and gloops. Kopin Tan who claims he tried a skin cream from the marque says the pe ratio is 25.3x earnings.

*Oops. I overstated the US court charge to Royal Bank of Scotland (RBS) for fiddling its reports to the federal housing finance bodies yesterday. RBS will not pay $1 bn but only $434-479 mn, according to Philippe Selendy, a lawyer with the FHFA who was quoted by seekingalpha.com/ We own RBS prefs. I got the fines for currency manipulation right. They will be $1 bn.

*To give credit where it is due, e-trade has managed to input a correct US ticker symbol for AIA Group (AAIGF) of Hong Kong, which is AAIGF, the second one so far.

*It also shows a pink sheet price for Fanuc and a ticker symbol, FANUF, but not the real ticker symbol for the ADR, which is FANUY. I have owned this share which is not in the model portfolio since before the ADR was issued from my Paris days. I have never found the price low enough to recommend it to you all and until recently it had corporate governance issues.

*The system at e-trade even for stocks I bought with them is not showing my acquisition costs. I think they are required to provide them under IRS rules now.

Funds

*Tomorrow European Equity Fund and New Germany Fund both go ex-dividend. EEA will pay 9.9 cents/sh for the half year; GF will pay 36.35 cents for the same period.

*With the dollar trending downward I am pondering another sale of UUP, Proshares DB US Dollar Bullish, but I cannot trade while the ACATs is pending. Front run me if you wish.

*Horizons US$ Currency ETF Unit now shows up in my e-trade acct as 44049C401 which looks like a cusip but which produces no price. The Toronto symbol is DLR.