bad seven times, Good Seven Times!

Thais have begun voting in what is expected to be a tight general election, one that could prove pivotal to the future of the kingdom.

There are 40 parties competing to fill the office of prime minister and 500 seats in the House of Representatives, according to the Thai Election Commission website. There are 1.2 million election workers and more than 94,000 polling stations for the country's estimated 47 million eligible voters to cast ballots, the website said.

Who wins Sunday's vote is far less important geopolitically than whether or not the results are accepted, according to Ernest Bower, Southeast Asia program director for the Center for Strategic & International Studies.

Yingluck Shinawatra, the head of the Pheu Thai party and sister of former Prime Minister Thaksin Shinawatra, is expected by pollsters to have an edge. She is standing against Abhisit Vejjajiva, the incumbent Prime Minister and leader of the Democrat party.

Victory for the Pheu Thai party would make Yingluck the country's first female premier.

The election will be Thailand's 26th since it became a democracy in 1932, before which it was an absolute monarchy.

The country has been governed under 17 constitutions and has had 18 military coups (both actual and attempted).

Investment ideas: Thai stocks = as cash will probably flood the domestic economy following the general election as the new government will speed up the implementation of the populist policies to please its supporters. All political parties have similar campaigns with more spending to spur economic growth.

If the election is accepted, then Buy Thai banks, property companies and tourism-related stocks.  Dusit Medical Services Pcl, the nation’s biggest private hospital operator, Minor International Pcl, which runs the largest hotel and fast-food chains, and. Pruksa Real Estate Pcl, the No. 1 residential property developer by sales. All could be of interest!

Render unto Caesar the things which are Caesar’s

According to Global Financial Integrity, multinational corporations’ tax evasion, when averaged per year over the last ten years, amounts to a global net loss of $400 to $440 billion for developing countries
1 June 2011, The European Investment Bank (EIB), the EU's financial arm, has frozen future loans to Swiss mining giant Glencore, suspected of tax evasion in Zambia.

"Due to serious concerns about Glencore's governance which have been brought to light recently... the president of the EIB has instructed the services to decline any further financing request from this company or one of its subsidiaries," the Luxembourg-based bank's website said.

Following a Zambian probe into tax affairs surrounding the mines and complaints by anti-poverty campaigners, the EIB has informed the EU's anti-fraud office OLAF and launched its own investigation.

"In the event that this investigation were to conclusively demonstrate tax evasion according to the Zambian authorities this would clearly expose MCM to local financial penalties and lead to events that may trigger early repayment of the EIB loan," the bank said.

The cause for the complaint lies in the financial and accounting manipulations performed by the two companies’ subsidiary, Mopani Copper Mines Plc (MCM), in order to evade taxation in Zambia.

Those allegations are based on the results of a 2009 audit performed at the request of the Zambian authorities, with support from Norwegian government, by international accountants Grant Thornton and Econ Pöyry. Among the anomalies revealed by the report, an unexplained increase in operating costs in 2007 (+ $380 million), stunningly low reported volumes of extracted cobalt when compared to similar mining companies operating in the region, and manipulations of copper selling prices in favor of Glencore which constitute a violation of OECD’s “arm’s length” principle. The result of those various processes was to lower by several hundreds of millions dollars MCM’s net income for the 2003-2008 period, hereby substantially lightening the company’s tax burden.

Those actions are all the more deplorable when one considers that the Mopani consortium operates in an already attractive fiscal environment, one highly favorable to foreign investment, and that Mopani also enjoys the effects of a 2000 development agreement with Zambia that provides massive financial and tax exemptions.

And if Zambia doesn’t raise your concerns then warehousing might?

Hagens Berman today announced that it is investigating potential claims against the owners of large metals warehouses, including Goldman Sachs Group Inc. (NYSE:GS), J.P. Morgan Chase & Co. (NYSE:JPM) and Glencore International PLC (LSE:GLEN.L) after media sources reported that the companies are limiting the amount of metal released to customers and investors, potentially artificially inflating prices.

The delay in releasing the metal has reportedly contributed to a significant growth in the price of aluminum and other metals. According to media sources, at least one major aluminum consumer has complained to the London Metal Exchange (LME), which sets the minimum amount of metal that warehouse owners must release each day. The LME is reportedly investigating the matter.

Hagens Berman is investigating whether the limits on metal released violate antitrust laws, and whether the warehouse owners’ activities constituted manipulation of the price of aluminum in violation of the Commodities Exchange Act (CEA).

Don’t do the crime, if you can’t do the time…..

Bulls break for the gate; while some struggle to get to find it.

Stocks rose, giving the Standard & Poor’s 500 Index its biggest four-day gain since September, and the Dollar Index posted its fourth straight loss after the Greek parliament supported a European bailout and a measure of U.S. business activity improved. Treasuries fell.
Research In Motion succumbed to rising shareholder pressure on Thursday, agreeing to study a split of its co-chair and co-chief executive roles and dodging a showdown at its annual meeting.

RIM said in a statement it would establish a committee of independent directors to study the executive and board roles, and make recommendations for a revised corporate structure.

RIM's problems stem from management not being able to execute on their plans, and few observers see that changing anytime soon.

In turn, activist shareholder Northwest and Ethical Investments withdrew a proposed vote on the issue at RIM's July 12 annual meeting.

"It's a good response to some risks that we spotted in how the company currently operates," said Robert Walker, vice-president of ethical funds at NEI, which will influence the committee's mandate and review its report, due by January.

But for other critics, RIM appeared to have kicked the issue into the long grass. "It smacks of RIM's progress toward solving their other problems, and that is it's glacial," Charter Equity's Edward Snyder said. "This seems like a band-aid solution."

Walker said RIM had reason to take the review seriously.  "The timing is such that we will have a chance to review how RIM has responded and consider whether or not we need to file a resolution for the 2012 AGM," he said.

RIM's committee must make its report public by January 31, 2012 and the board will have 30 days to respond.

Snyder said the vote would have given investors a chance to grill RIM's leaders on their strategy. RIM has delayed launching new smartphones while its PlayBook tablet, designed to compete with Apple's iPad, faced tepid reviews.

RIM's shares have lost half their value this year amid profit warnings, a waning market share and a failure to push out cutting-edge products capable of challenging Apple's iPhone and the slew of devices running on Google's Android software.

An unnamed source identifying himself as a senior RIM executive posted a 1,700-word letter on the Boy Genius Report website on Thursday that attacked the BlackBerry maker for failing to focus on users and developers and questioned whether the co-CEO structure was efficient.

RIM said in response that it was aggressively addressing its challenges as it neared the end of a major business and technology transition.

Investment ideas: Apple, Google.

white picket fence anyone?

Hard to see another floor to real estate. Now that the banks are settling on toxic portfolios, we should see new life to owning a piece of the rock.


More Americans than forecast signed contracts in May to buy previously owned homes, signaling the residential real estate market may be rebounding from a slump earlier in the year. 

The index of pending home resales increased 8.2 percent from April after a revised 11 percent drop the prior month that was smaller than initially reported, the National Association of Realtors (NAR) said today in Washington. Economists forecast a 3 percent increase, according to the median estimate in a Bloomberg News survey. 

The NAR said the May increase was the biggest monthly gain since November. 

All four regions showed an increase in contract signings from a month earlier, led by a 13 percent gain in the western U.S. 

Lennar Corp. (LEN) Chief Executive Officer Stuart Miller said last week he sees the first signs of “repair” in the market. The third-largest U.S. homebuilder by revenue reported second- quarter profit that beat analysts’ estimates on higher house prices and earnings at its distressed-investing unit. 


Investment ideas: LEN, BZH, NVR

Four Witches of Settlements: Contingent Liabilities, Costs, Time & Juries

 "If you're a PLAINTIFF investor, you now know this is a potential lottery ticket, and the only way you lose is by not playing," said Matt McCormick, a portfolio manager at Cincinnati-based Bahl & Gaynor Investment Counsel.

Bank of America, the largest U.S. lender by assets, announced a deal to pay $8.5 billion to bondholders that said they were duped into investing in defective mortgages.

The deal will pave the way for investors holding mortgage-backed securities filled with now-toxic home loans to pursue claims against other large mortgage lenders such as Wells Fargo & Co and JPMorgan Chase & Co, analysts said.

A settlement, first reported by The Wall Street Journal, would be the largest in the banking industry to date. It would also require approval by Bank of America's board, which met on Tuesday to discuss it, according to the source.

After news of a possible settlement, shares rose as much as 3.5 percent.

The largest U.S. bank by assets has been fighting claims by a group of 22 investors over the housing-related securities it packaged and sold before the financial crisis.

This investor group includes BlackRock Inc., MetLife Inc. and the Federal Reserve Bank of New York, in a dispute dating back to the fall. It had threatened to take the matter to court, but both sides delayed a trial early this year to continue settlement negotiations.

Bank of America was not immediately available for comment. BlackRock declined to comment.

Bank of America's possible settlement extends beyond the case brought by the initial group of investors, and could resolve "significant parts" of its exposure to repurchase claims from private investors, the person familiar said.

Last Fall, Bank of America Chief Executive Brian Moynihan has said the bank would contest any repurchase claims, and described the process as "hand-to-hand combat."

But as the bank entered into settlement agreements with bond insurers and the two government-backed mortgage investment companies, Moynihan softened that stance, and said the bank would settle when fighting would offer little for shareholders.

Investment idea for sage leadership: Bank of America!!!

NIKE -- flies off from a great quarter!

Nike was appointed Zeus’s charioteer and road him to Victory against the Titans.
Our Nike’s revenue for the quarter rose to $5.8 billion from $5.08 billion beating analysts who expected $5.528 billion of revenue for the period.

Futures orders, a closely watched measure of demand in coming months, came in ahead of Wall Street estimates. Orders for June through November jumped 15 percent to $10.3 billion. Excluding currency effects, orders rose 12 percent, Nike said.

Barclays Capital analyst Robert Drbul expected futures orders to be up 8 percent to 10 percent in constant dollars. Arnold, the analyst at Edward Jones, was expecting future orders to be up at least 8 percent.

Strong futures orders suggest Nike will be able to raise prices later this year, Arnold added.

Fourth-quarter revenue generated from Nike brands jumped 22 percent to $2.1 billion in North America, the company reported. The strongest growth came from running shoes, men's training gear, sportswear, basketball and women's training, which were all up at least 10 percent in the period.

Footwear sales were up 20 percent, while apparel revenue rose 28 percent, "driven by strong category presentations, improved product lines and earlier shipments of summer season product," Nike said in a statement.

Sales were partly driven by Nike Free, a new line of shoe that mimics barefoot running, Arnold said.

Nike also highlighted its direct-to-consumer business, which includes online sales. Sales were up 23 percent in this segment, with online sales rising 31 percent

Investment ideas: Nike, VF Corp or Wolverine Worldwide

Unsinkable OR practically unsinkable

"We do not care anything for the heaviest storms in these big ships. It is fog that we fear. The big icebergs that drift into warmer water melt much more rapidly under water than on the surface, and sometimes a sharp, low reef extending two or three hundred feet beneath the sea is formed. If a vessel should run on one of these reefs half her bottom might be torn away." -Captain Smith, Commander of Titanic

23 June 2010 the Italian CDS widened to 198! Europe is in an icy fog. Could an AIG or too big to fail be out there under the surface with icy ragged edges about to sink the unsinkable or practically unsinkable Euro? No one seems to be sure because once again of derivatives and some companies having likely insured billions of dollars of European debt. The first strike will be Greece defaulting, second Italy, then the third Spain. Alarms will go off and MayDays out but no one will be able to maneuver in time to prevent another wave of TOO BIG TO FAIL.

The lookout in the bird’s nest, First Mate Ben S Bernanke reported to the pilot deck, “a disorderly default in one of the those countries would no doubt roil financial markets globally. It would have a big impact on credit spreads, on stock prices, and so on.”

So what are we really talking about? No one can actually put a firm number to the actually size but the floor is Italy, Spain, Greece, Portugal and Ireland’s sovereign debt which amount to $616 billion. So not being to outrageous but you could easily have a $6-7 trillion exposure or more! “There’s not any clarity here because people don’t know,” said Christopher Whalen, editor of The Institutional Risk Analyst.

Much like housing bubbles, CDS bubbles where they are known or believed to be must be popped before they get to catastrophic sizes. An orderly Greek default would likely be in the best interest of the market, provided it doesn’t set off a domino effect and that would not be known until we set it in motion.

European banks hold the bulk of direct (cash) exposure to peripheral European borrowers, whereas US banks have little direct exposure. But US banks appear to have written the majority of CDS contracts on peripheral European borrowers, up to three quarters of the total in most cases. The data doesn't tell us who has bought CDS protection on peripheral European borrowers, but it would be reasonable to assume that EU banks have tried to hedge their direct exposures by buying CDS protection from US banks. Therefore if we get to the point where a European borrower restructures its debt you would assume that Europe in general would have an incentive to try and trigger CDS protection payouts, whereas the US would typically want to avoid an event of restructuring because its banks would then potentially have to make big payouts. Guess what? First Mate Ben is working this hard with his European Counterparts.

"And it wasn't until we were in the lifeboat and rowing away, it wasn't until then I realized that ship's going to sink. It hits me there."
-Eva Hart, Titanic Survivor

Investment ideas, shorts on US and EU banks (see CMA spread trends for ideas)