The Eurozone is suffering from restricted growth according to the European Commission which now forecasts that 2014 growth will be 0.8% overall for the 18 countries in the currency bloc. This is well below the earlier forecast of 1.2% growth, which was already low.

Things will not improve much next year. The Commission now expects 1.1% growth in 2015, vs an earlier prediction of 1.7%. This means that unemployment will not fall because nobody will be hiring the jobless. It also means a very low inflation risk.

The worst performers among the big EU countries are France and Italy, being forced by Germany (acting through the EU) to cut their deficits. This means they must raise taxes or cut government spending which puts a brake on recovery.

There are a couple of lessons from the lowball forecasts. Firstly, European malaise is not total. There are outlier countries which do not use the euro and which may be able to pursue growth policies despite the anti-deficit line. So they are better places to invest in as their company profits will grow without being trapped by the common currency and the demands of budget-balancers.

The obvious examples are Britain, Sweden, and Switzerland. Norway would be another but for its dependence on oil exports which are going to be hurt in both volume and price by the lagging economies of its neighbors.

Another lesson is that picking good companies is more important in stock performance than currency or growth trends. Macro-economics uses too broad a brush for seeking growth stocks, which exist even in stagnant economies.

A final lesson is that this too shall pass. Given the role of Germany (and to a lesser extent other advocates of fiscal orthodoxy like Finland or Holland), their own economic woes will probably override their ideology. With the risk of recession even in Europe's largest economy now clear, I expect that German politicians, with Angela Merkel in the lead, will shift gears and decide to invest more than tax receipts produce, in green energy, in infrastructure and repairs on the Autobahn, in defence, in housing subsidies, in all-day schools, and unemployment benefits. These modern and traditional German ways to stimulate the economy will also eventually help its neighbors.

A factor that nobody likes to consider is how well Britain is doing with its go-it-alone stimulus and quantitative easing. So successful has the UK program been that it is now being billed for a special fund because its growth exceeded Brussels estimates, which is causing a political flap.

The UK has been demanding special exclusions from Brussels levies since Margaret Thatcher was Prime Minister, and David Cameron is following in her footsteps even though he does't carry a handbag.

With the flaky UK Independence Party threatening the Tories on the right, Cameron has to show toughness to European bureaucrats to keep power and to eventually win a referendum on British exit from the EU. Hence he is channelling Maggie Thatcher, also in calling for limits on the free movement of people within the EU, a violation of one of its founding principles. However, what with Muslim terrorists taking advantage of their rights under the Schengen accord to hop across borders to commit atrocities or to go off to fight with ISIS in the Middle East without hitting passport controls, some of the Cameron program may wind up being accepted by the EU as a whole before too long.

There is a special reason explained for paid subscribers below why I am singing “This Land is Your Land” as I toddle off to vote.

More news from Spain, The Netherlands, Canada, Singapore, Israel, Britain, Mexico, Australia, New Zealand, Korea, and Japan.

*Banco Santander this morning reported a 52% rise in Q3 profits vs prior year, at euros 1.61 bn (~$2 bn). This handily beat analyst forecasts the first time Executive Chairwoman Ana Patricia Botin gave the results in credible English as well as Spanish. Ms Botin controversially took over after her father, Emilio Botin, who had turned SAN from a provincial bank into a global powerhouse, died in Sept.

The key driver of profits was Spanish recovery from the global financial crisis where earnings more than tripled to euros 3.09 mn. Economic recoveryh allowed SAN to cut its provisions for defaulted and delinquent loans by 8% to euros 2.78 bn which fed right into the bottom line. SAN's nonperfomrning loan rate fell 17 basis points to 5.28% from Q2.

Also helping was the net interest income level which rose because loan demand picked up while its costs of money fell. This rose 8% to euros 7.47 bn. Operating expenses were kept under control, rising only 2.5% to euros 5.07 bn.

With such spectacular Spanish performance, the rest of the world came in less strongly. UK profits rose 34% to the equivalent of euros 411 mn. Britain was Ms Botin's responsibility before she succeeded her father at the top of the firm. Latin America profits came to euros 786 mn, up 9%, overcoming some of the weak economic conditions there, but obviously not all of them.

Thanks to Spain, the bank's tier 1 capital came to 11.4% of its loan book, vs 10.9% in the prior quarter. The official requirement is 8% which obviously has been exceeded.

Family-controlled firms like SAN, according to the current issue of The Economist, tend to take a long view, and to be managed conservatively and sometime unimaginatively. But for whatever it is worth, the Botin clan do not have the votes to bulldoze their members into top jobs without qualifications. The fact that Emilio Botin picked a daughter rather than the more macho alternative of a son reveals how untraditional SAN is. And caution is hardly in surplus supply among banking families in the Iberian peninsula, starting with the now defunct Banco Espirito Santo from neighboring Portugal.

The stock price fell in Madrid by 2.5% this morning.

* Global Logistics Properties, of Singapore, reported revenues up 25% in H1 to US$362.2 mn. Operating profit jumped 15.7% to $264.6 mn before foreign exchange losses of $54 mn. With the weaker Yen and Real and the sale of some assets, GBTZF net profit fell 23% y/o/y in H1 to $269 mn. GBTZF also presented alternative tallies which treat these as “one-off” events, it says that net profits actually rose by 12% to $319 mn. You can take these claims with a grain of salt.

The Motley Fool Singapore again tipped GBTZF, which it called “a growth story.” China is its largest market now and despite statistics there is growth to be found in China warehouses and logistics facilities, of which GBTZF has 570 now. The number and square footage are both up 6% sequentially from Q1 FY 2014-5 (to June) and the total under development would double the space.

While Japan facilities are not being added to, they are very productive as 99% of the faciltieis are leased now, the highest rate in its portfolio. Brazil facilities increased by 5% in number in the quarter, but there was no square footage comparison. Both Brazilian and Japanese holdings fell in value in Q3 because of exchange rate changes.

A key positive metric was that thanks to deals with pension plans, Global Logistics eliminated its debt as of the end of H1, with total cash exceeding its borrowings of $587 mn. It closed FY 2013-4 a half year earlier with debt at $1.162 bn. This turnaround is strategically important.

GBTZF reports in US dollars but observes a Pacific Rim FY ending Mar. 31.

*Agrium rose 2.5% this morning to a new year's high in Toronto. Alas we own the US version of AGU which is doing less well. AGU reports in US$s. Its Q3 profit beat estimates of 49 cents sh by 14 cents or 28%. Net income hit $91 mn. Sales in the quarter rose 4% to $2.92 mn which failed to meet forecasts.

AGU also upped its quarterly dividend by 4% to 78 cents/sh perhaps to satisfy activist investor ValueAct Capital Mgm LP which has taken a 5.7% stake.

Potash did less well than the rest of the business as it barely made money. There is hope a new Chinese contract will help. It also boosted its retail and wholesale volumes ofr nitrogen and phosphate plant food thanks to including results from Viterra Inc centers this year..

Nudged by the activists, it also kept general and administrative expanses under control vs prior year but because of good performance it had to boost share-based payments to its board.

*Bank of Nova Scotia reported that it will take a C$451 mn charge ($395 mn US) to cut jobs and write down investment in Venezuela (Banco del Caribe, of which it owns 26.5%) and some sour loans in the Caribbean hotel market. BNS specializes in Latin America.

There it will close 120 branches or reduce their manning levels. It will also cut jobs at head office and speed up the write-off of bum consumer accounts in Canada. After taxes the bite will be only C$341 mn.

This will take place in the current quarter, the first in FY 2014-5 under BNS rules which closed the year Sept. 30. The charges will cut diluted eps to 28 cents in the quarter to C$1.40 and lower its tier 1 equity by 10 basis points. These “difficult but necessary decisions to support our long-term goals” said CEO Brian Porter will not result in any change in the bank's forecast earnings this year. Longer term it will salve C$120 mn per year starting in the currenty FY. BNS reprots its full FY results Dec. 5.

BNS has been a poor performer among Canadian banks off 16% after it took a charge for soured Puerto Rico bonds last quarter. So far this year it is up an under par 3.5%. BNS may sell its Spanish-speaking US arm but wants to stay in the business in Chile, Mexico, Peru, and Colombia and build up its strength in .

Oilpatch Innovation

*As our oil services shares sink into the mire, it is important to recall that they are not directly affected by the lower prices of oil and gas, hit by the US shale boom and declining demand. Schlumberger this morning fell toward $94. We reported that SLB has launched a new well integrity program for exploration and production companies, Invizion Evaluation. It combines in one spreadsheet all the acoustic and physical data on an open hole, for drilling, cementing, and well logging. This better prevents blowouts and also integrating workflow can help drillers time cementing programs to save time and money. Waiting until there is a blowout risks takes 15 more hours of downtime than cementing in advance. The lower oil price will help SLB sell this system. SLB is Dutch.

*Dynamic Reservoir Modelling Systems (DRMS) has been a key product of Computer Modelling Group, CMG of Canada. The stock has lagged ~20% since its 2:1 split in Mar. when its FY ended. It is expected to earn 39 loony cents this year vs 35 cents (post-split last year) and 45 cents in FY 2015-6. Being a small cap it is suffering more than SLB and Royal Bank of Canada has just cut its rating to underweight. Building on its DRMS, it is launching a new system called Coflow which integrates serveror and producting modeling applications. This was developed in sub-salt drilling offshore Brazil in cooperating with Shell and Petrobras, but now CMG is also offering it to other drillers via a standealone program headed by the former DRMS chief, Rob Eastick. A hint of how important this can be is that tech support is being offered in Calgary (HQ); Huston, London, Caracas, Dubai, Bogota, and Kuala Lumpur.

The yield is 3.3% while you wait. The p/e ratio is a scary 27x next year's earnings (FY 2015-6 starting in April.)

*Delek Group Chairman Gideon Tadmor pointed out that the Leviathan offshore field will put NIS 300 bn into “Israel State coffers”, in an attempt to get better backing from Jerusalem pols for the energy sector. He was speaking at a Tel Aviv conference sponsored by Globes Israel, a website. A recent report by the Norwegian govt. rated Israel 48^th in the world on its risk index for oil-gas operations, and 61^st in general attractiveness. Yet Israeli isolation from its neighbors and its energy security have been changed by the offshore gas finds.

Tadmor added: “Israel has receiveda one-time opportunity to create socio-economic and geopolitical change” which could “transform Israel into a stabilizing factor in the region.” “To realize the dream, what is now required is to take the right decisions and implement them swiftly.”

Drug Stocks

*Teva is expanding its nervous system portfolio by initiating two new phase 2 trials for laquinimod, the drug it is developing with Active Biotech of Sweden. The first will be to evaluation it for treating primary progressive multiple sclerosis in two dosages, with an endpoint of brain atropy to be determined with MRI analysis at week 48. The second is for laquinimod in treating Huntington's disease, a hereditary plague that killed the folksinger Woody Guthrie at age 55 but spared his son Arlo. A first patient was enrolled in that trial.

*UK consumer and household goods firm Reckitt Benckiser has named the pharma unit it wants to spin off to us by the end of this year and the man who will head it. The entity, named “Indivior plc” (combining individual and endeavor) will be headed by Carly Claiborne, who had been CFO of Sucampo Pharma, a US small cap. Comments Martin Ferera who tipped the stock “I hope they didn't pay too much for that name.” RBGLY's drug assets cinter around a sublingual heroin replacement therapy whose sales are under pressure. We still have to vote on the spinoff.

*CEO Dr Peter French of Benitec responded to my call for him to make an effort to get US analysts to cover the Oz share. He is giving an investor update in NYC on Nov. 19 to present how BTEBY is bringing its transformational therapeutic to the clinic and the market”. I will try to wrangle an invitation to meet.

*Sanford Bernstein analysts have downgraded Nokia to underperform from neutral and NOK stock fell on the idea that its prices for HERE and licenses are too high. It set a target price for NOK at euro 4.9, down froman earlier 5.5.

Fund Notes

*If the Swiss vote Nov. 30 produces a lot of voting for the currency to be backed by gold, you may see our SPDR Gold Fund back buying the yellow metal to meet investor demand. These days GLD is a net seller.

*In Mexican trading today, Fibra Uno fell 2.6% because of worries about its ambitious expansion plans. FBASF presented them to a bunch of greedy Wall Street investment banks which applauded, but back home the mood is more cautious. It went ex-div today. FBASF here; FUN011 south of the Border. It will pay on Nov. 14 its dividend. Rating agency Moody's has affirmed Fibra Uno at Baa2 but cut it from positive to stable on the expansion plans.

*Aberdeen Asia-Pacific Income Fund, FAX is 42% invested in Oz dollars and 40% invested in Down Under bonds, 9 of the top 10 from central or provincial government entities. Its largest holding by currency are in US$s, at 44%, but only 1% is US risk, as the dollars have been borrowed by foreign entities. FAX's geographic risk, after Oz, is from China, South Korea, India, Indonesia, Hong Kong, and Malaysia, with bits and pieces elsewhere. It also has 1.8% of its geographic risk from Germany for some reason along with other cents like Singapore.

*Aberdeen Global Income Fund (FCO) also shows the US$ as the largest currency in its portfolio, at 32%, but again this is merely because other countries borrow in it. The largest country risk is the UK where it owns 3 “gilt” issues among its top 10 holdings. Gilts are UK Treasury bonds. The next largest numbers are Canadian, New Zealand, and Australian government bonds, 2 each, and an International Finance Corp. (World Bank) bond. The fund also has 21% of its portfolio in emerging market risks, but only 7% in emerging market currencies.

*Aberdeen Japan Fund (JEQ) lost 0.1% in net asset value in Sept. but its market price fell 2.1%, it reported. The Topix fell 10% but that was in yen.

Its top holding is

*To better automate its share buybacks, Korea Fund will now use the end of its FY (June 30) to set the target for a 10% purchase of shares outstanding in the following FY. The actual purchases will take place on a day when the discount from net asset value has been at 7.8% over that day and the 4 preceding market days.