Yesterday I got a lot of attention, being quoted first on Seeking Alpha.com, which picked up my overall blog with the note by Dr. Max Golt on how currency trading is becoming more restricted, and my quoting Michael Kurtz on China inflation sectoral predictions. I was also interviewed on his hedgefund radio program by John Thomas, of  themadhedgefundtrader.com

I was thinking a bit about the latter chat today. As old-time readers know, I share a birthday with a Burmese “twin” Aung San Suu Kyi AKA The Lady. She was released from house arrest over the weekend. The question is whether there is any way to invest in Myanmar to celebrate with The Lady. The answer is: no. The SLORC, or whatever the military junta call themselves now, do not allow businesses, except Army businesses (like timber cutting, rubies, and oil exploration) they run for their own corrupt profit.

Every market in the world is not necessarily worth investing in. Vietnam is another. About 18 years ago Mark Mobius of the Templeton Group launched a closed-end Vietnam Fund which I and my readers bought. But Mark, an old Asia hand (his first job after getting his PhD from MIT was selling Tiger Milk in northern Thailand) could not find ‘Nam companies to invest in. So fund holders were given their money back or a chance (which I took) to buy into the Templeton open-end Emerging Markets Fund without paying the 8.25% fee then charged.

Just because Mount Everest is there, you don’t have to climb it, unlike Sir Edmund Hillary. And just because a frontier economy is appearing on the radar screen, you don’t have to venture to invest in it.

Meanwhile perfectly respectable stocks from westerncountries deep in disaster, like Greece, Portugal, Ireland, and Japan are doing well for our subscribers. In serious economies with problems, often investment vehicles can override the problems. More on this for paid subscribers below.

I try to keep my stock picking ideas cool and objective. I generate stock picks, of course, but I prefer to keep myself out of the portfolio side of this newsletter. First, my readers want stock advice, not chatter about me, because the advice gives them a chance to make money. That is what they subscribe for.

Moreover, as journalism, global stocks are more interesting than I am.

Finally, while I founded Global Investing, I am today only part of it. My ideas are often triggered by readers or my reporting the team. Putting my name on articles I write seems like a mild form of narcissism. So when I have written something myself it is not signed in the copy posted or emailed, but only on the bottom of the newsletter along with the copyright protection.

Jason the marketing guy says we need to “put a face” on the company. I’m hard pressed to understand why anyone would want to see my face, or why showing it is good business, but never argue with marketing.

Anyway, I am relieved that we have our banner headline and my signature and the copyright notice back after a tech migration problem.

Which brings me to another vexed matter. Paid subscribers do not have any right to violate copyright by re-sending e-mailed issue to buddies or relatives. This is against the law. Paying a subscription fee gives a subscription to a single household, via a single e-mail address. (Sometimes we collect a second e-mail address for the same person because of delivery problems, but it goes to the same one person.)

When we discover that emailed issues are being illegally passed on, we require that subscriber to log on to our website, www.global-investing.com, to read the issues and the convenience of e-mails stops. Log-ons are tracked so we can be sure that the person has paid and logs on a reasonable number ot times.

There is nothing unfair about this. Ours is a business, whose purpose is to make money. The fact that we now distribute via the Internet does not change anything. When we run articles from a reporter in Japan, as we did yesterday, we pay him for them. There is no free lunch, no free yakitori, no free miso soup.

I let Chris Loew talk about growing up in the woods of the Pacific northwest before moving to Japan, because that is part of what he is paid to write about. And it makes Jason happy. The whole thing is copyrighted. It is ours. It is not distributable.

As I try to deal with the emotional havoc of restoring this business I am relieved that our subscriber numbers are going up steadily, and that I have been able to extract my capital invested in the restart and the Rightside bankruptcy three years ago.

And I am shattered that another letter I respect, www.Thaistocks.com, is being shuttered by its creator, Paul Renaud of Phuket who is fed up with the grubby business of soliciting subscriptions, and wants to become a money manager. I sympathize.

And when long time subscribers who have sent me thank you letters for my work turn out to be sharing subscriptions with grandpa or uncle in the Bahamas or Berkeley I am tempted to do a Paul Renaud myself.

I’ve known Virginie Maisonneuve who heads Global Equities at Schroder Investment Mgm North America for decades. So I am delighted that the French-born China-hand is now buying into X, listed in Toronto, only traded in Canada, a long-time GI pick. Her firm now belongs to Vanguard; when I first met her she worked for Wellington, also part of Vanguard.

Another stock she favors is Y which can be bought by copycat investors if I put it in a Covestor account. X trades only in Canada. The Covestor system only allows me to pick shares whose capitalization is over $50 mn and whose USA trading exceeds $10,000/day. A stock from the True North, Y does not trade that much in this country. I am considering creating a buy and hold Covestor portfolio but compliance issues discourage me.

In any event, there will be no blog Wednesday morning since I am meeting with the Covestor compliance lawyers.

What follows below is for paid subscribers only, and not their children living away from home, their second cousins, poker pals, grandparents, uncles and aunts, ex-wives, etc. We report from the oil patch, on financial service companies and banks, on tech, on environmental stocks, and of course on chemicals and drugs. With a big find!

Back to the barbarous relic?

In an op-end article in today’s Financial Times, the president of the World Bank, Robert Zoellick, calls for a new package of global trade and structural reform. Mr. Zoellick, an American, causes nowaves with his call for international cooperation to spur growth and avoid intervening in currency markets, and to help the poor and support private secotr development.

But then he lands a shocker, with an addition to his call for a new monetary system involving the dollar, the euro, the yen, the pound and a more international renminbi, in these words:

“The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values.”

His Betton Woods II would revolutionalize economic exchanges by bringing gold back. He further writes “Although textbooks may view gold as the old money, markets are using gold as an alternative monetary asset today.”

If you look at the price of gold right this minute, it is going up because it is Diwali in India. While usually gold moves the other way to “fiat currencies” in times of high demand both gold and the US dollar can move upward together.

In fact gold is a pretty poor anchor for stability. Its price jumps all over the place. Chris Dillow writes about the yellow metal in today’s on-line Investors Chronicle:

“Since January 2000, the standard deviation of its weekly price moves has been almost twice that of the yen/$ or euro/$ rates at 19% annualized vs 10.5%. What’s more, major foreign exchange markets seem to be more informationally efficient than gold. Whereas these seem close to a random walk, gold prices are vulnerable to momentum effects. The notion that gold is a stable store of value – which is a desirable feature of a true monetary asset – is inconsistent with with facts.

“Linking exchange rate expectations to gold would – if it does anything at all – tend to introduce more volatility into exchange rates. I don’t see the point of this.”

Furthermore, Mr. Zoellick appears to to suffer under a delusion that the current global crisis and recession can be blamed on floating exchange rates unanchored to gold. On the contrary. The measures being taken by the Fed and other central banks would be impossible if the world still was being run under a gold standard. That was what went wrong in the 1930s, the last time there was a world financial crisis, when the need to support their currencies led central banks to deepen their domestic deflation, unemployment, and depression.

If you have a gold standard, you cannot have quantitative easing and you might not even be able to have deficit spending on the scale needed.

Curiously, Mr. Zoellick seems to think that his gold-link would not prevent another step he proposes, that “the US and China could agree on specific mutually reinforcing steps to boost growht [and} also agree on a course for renminbi appreciation.”

I am seeking shelter.Whither the dollar? Whither the markets?

The election results and the second huge round of Quantitative Easing by the Federal Reserve require that we ponder the trends. Dollar futures are continuing to fall, and momentum is still bearish. Stocks are still rising not just here in the USA but worldwide. Commodities are still hopping, except for gold which has a scizzors relationship to our currency. The Dow Theory confirmed a bullish trend when both the industrials and the transports closed over their 25-mo highs.

But when everyone is saying the same thing about where markets are heading and more and more folks are jumping on board the speeding train, a good conductor worries about her brakes. I am putting on my contrarian hat today.

Today is a hiatus between the election and the next round of quantitative easing, so I wanted to fill you in on some great news. Lightening has just strike a third time for our small caps, as you can read below.

But here is something else.

“First class for all.” The Portuguese vacation charter airline White tested offering all passengers first-class meals in a Lisbon-Cancun flight earlier this autumn. Chef Olivier (not the British one) prepared meals served on board for all 214 flyers using products from Lidl, a German-owned discount discount supermarket which operates also in Portugal. He was on the plane to accept their compliments. Ad agency Leo Burnett thought the idea up to stress that Lidl can offer top quality food at low prices by selling out of cartons on the floor and shelves, and offering only a limited line. The happy passengers are shown in a clip that is running on Portuguese TV but which also has gone viral.

What a change from Ryanair which is charging for bottled water and plans a fee for using the toilet.

Goldman Sachs put out a doorstopper 100-page report with its 2011 forecasts for China mainly stressing that growth will be 10% (higher than consensus) and that the RMB will be allowed to rise 6% in the year. More on what that means for our portfolio below.

Other news from China, Israel, France, Switzerland, Britain, and Canada (francophone only) follows for paid subscribers.

Investors poured more than $13 bn into U.S. ETFs last month, lifting assets to over $940 bn, up14% year to date. The three most popular funds in October were all emerging markets ETFs(IndexUniverse.com data): Vanguard MSCI Emerging Markets ETF (VWO), which gathered $3.22 bn; iShares MSCI Emerging Markets Index Fund (EEM), $1.57 bn; and iShares MSCI Brazil Index Fund (EWZ), $1.18 bn. Dilma be good!

Australia’s CB raised interest rates another quarter point to 4.75%, in anticipation of which we bailed out of Westpac, worrying about the impact on the booming housing market down under. WBK.

Looking for something to do after losing his bid for the CT Republican Senatorial nomination, stockbroker Peter Schiff writes of his launch of Euro Pacific Precious Metals, LLC. A cynic might say this may indicate a market top for gold.

“This new company, of which I am [CEO], offers physical delivery of gold and silver coins and bullion at fair and competitive prices based on my reputation for integrity, straight talk, and fair dealing. It does not deal in numismatic coins, commemoratives, proof sets, etc., which I do not believe are suitable for investors.

He also launched a new monthly newsletter, Peter Schiff’s Gold Report which will feature feature articles by Schiff plus regular columns by the gold expert Aden Sisters and resource specialist Doug Casey’s firm, Casey Research. Peter adds:

“I have always advocated that investors hold at least 5 to 10% of their portfolio in gold and silver bullion and coins. Tangible wealth, not subject to confiscation, registration, or unwarranted intrusion by government, should be a core component of any well-balanced portfolio.

“I believe physical precious metals are the ultimate insurance policy in today’s perilous world. No other investment offers the same level of financial privacy, while eliminating counterparty risk. Physical precious metals do not depend on a court, a bank, or a stock exchange — their value is intrinsic.

“I expect gold and silver prices to move much higher. Pressure is building in all parts of the world for solutions to the debt crisis that many nations face. The classic way for governments to deal with excessive debt is by debasing the currency, i.e. inflation. This has already started, with the U.S. Federal Reserve printing trillions of new dollars since 2008. Many observers think the world’s only superpower is heading toward bankruptcy. And there is no one big enough to bail us out. This means inflation of historic proportions. Potentially sending gold prices higher than most hard money investor would ever dream.

“Over the years, many clients of my brokerage firm followed my advice and purchased coins and bullion from coin dealers. Too often, however, I heard that clients needlessly overpaid for their gold. In some instances, they were ‘sold’ on coins that were really not suitable for them. So I decided to go into the business directly. The goal is to provide a trustworthy source to find top-quality gold and silver products at competitive prices.

“Euro Pacific Precious Metals features the most widely known and liquid gold and silver coins, such as American Eagles, Canadian Maple Leafs, Australian Kangaroos, South African Krugerrands, and Austrian Philharmonics. I strongly believe you should avoid buying ‘exotic’ or ‘numismatic’ coins for investment purposes. Commissions on such products are very high, and liquidity often is very limited.”

Schiff forgets that Franklin Roosevelt’s Administration confiscated American holdings of gold in the 1930s. When your editor got married, an elderly neighbor originally from Santa Barbara gave me one of her then illegal $5 gold pieces, part of a horde she kept in a safe deposit box. As ordered, I wore it in my shoe as I walked down the aisle, to ensure a prosperous marriage. Pres. Nixon ended the ban on Americans owning physical gold, but presumably a precedent for seizure by Washington exists.

Peter Schiff would never shop his clients to the Feds, but I am not sure they are safe from hackers and phishers.

More for paid subscribers with lots of news from our companies and a sell today, from Israel, China, Tennessee (!), Britain, The Netherlands, Brazil, Canada, and Denmark.

Today I want to talk about two vampirettes. Dilma Rousseff has broken the sex barrier in Brazil. Too bad she is supposed to be a bigger believer in state power and nationalization than Lula da Silva, whom she will succeed. That may be the bad news from Latin America, but nobody really knew what Lula would do before he took office, and I suspect Dilma has not confided in stock market analysts either.

The apparent good news is that some observers believe that Penguin Vampirette Cristina Fernandez, who kind of looks the part, widow of her predecessor Nestor Kirschner, will be more centrist now that he has died, leaving her free to find her own advisors, make peace with the IMF, Clarins, and the Argentine Oligarchs. Again this is not based on any serious info. Historically, Peronist women in power have been far more economically illiterate and dangerous than their husbands.

My Toshiba external hard drive is kaputt (or whatever they say in Japanese) and I therefore could not do my tables over the weekend. My excuses for the delay. The toll-free numbers I am given do not work. After the blog has been posted I will try again. The level of Toshiba customer service has sunk to levels reflecting poorly on Japan.

» The number of available DR programs globallly rose to 3,214 from 3,096 a year ago, from 76 different countries.

» Depositary Receipts H1 trading volumes rose 6% to 79.3 bn shares, versus 74.5 bn in H1 2009. Trading value rose by $547 bn or 4.3% to $1.8 trillion as of June 30.

» Capital raisings increased 133% to $3 billion; IPOs continued to rebound from 2009 levels and accounted for 54% of total H1 capital raising. Almost all the IPOs were from BRIC countries, except for Brazil.

» While 90% of US trading was in listed ADRs on the big board and the Nasdaq, the depositaries mainly created new unsponsored Depositary Receipts listed over the counter. Only one sponsored ADR, for Britvic, was not listed on an exchange. Companies sponsoring previously unsponsored ADRs included Denmark’s Carlsberg and Japan’s Takeda Pharmaceutical.

» Following the US 2008 rule change, 951 new unsponsored ADR programs were established, 79 of them in H1 of this year. There had been only 177 unsponsored ADR programs when the SEC reopened the market. The total now is therefore 1128 programs run by Citi, JPMorgan Chase, Deutsche Bank, and the leader, Bank of NY-Mellon. Nine programs are Global Depositary Receipts mainly traded in London, not in the USA. Citi’s proprietary data shows that market cap of unsponsored DR programs rose 19% year over year mostly from French, Chinese, German, and Australian DR programs, while those from Denmark and Japan declined. BNY-Mellon acted as structural advisor for the future Indian depositary receipt program.

» British DR trading rose sharply because of BP which accounted for 3.8 bn ADRs traded in H1 this year vs 979 mn in H1 2009 and 442 mn in H1 2008 according to Citi.

» Total U.S. investment in non-US equities in Q1 2010 was $4.2 trillion, up 63% from Q1 2009. Data for Q2 are not yet compiled.

*Citi’s “Liquid DR Index” underperformed the S&P 500 in H1. Please do compare this with the www.Global-Investing.com portfolio’s performance on closed positions which is public.

Dow Jones reports that Baring Private Equity Asia, an independent fund manager, is raising $1.75 bn for a new Asia-focused fund. Asia appears to analysts to offer an opportunity for bigger returns in the coming months. PriceWaterhouse wrote recently that initial public offerings in mainland China will raise over $73.8 b in H2. .

Hong Kong-based Baring Private Equity Asia closed its previous fund, a $1.52 bn investment fund in May 2008. While the fund is mainly focussed on China, it has also been active in India (explained for paid subscribers below.). The fund also bought in Japan and southeast Asian countries.

Previous funds invested in alternative energy, media and financial services. It also went into sectors the Chinese govt. favored like services. Baring Private Equity Asia was originally part of ING Groep NV but was bought out by management in 2000. Apart from British, US, and Canadian pension plans, Baring has won investments from Goldman Sachs which presumably has enough money in its kitty (despite the $550 mn record civil fraud settlement with the SEC over CDOs being missold) to invest in the new round…Baring can buy on stock markets or by private placements or buyouts.

*Baring’s India portfolio for its last fund was built up starting in 2007 with help from ICICI Ventures, a sub of ICICI Bank, IBN. Together they bought Karvy, an Indian stockbroker, for $44 mn. R.P. Singh, Indian Industry Secretary, determined that IBN should not be handicapped because of foreign shareholding, since it is incorporated in India. However other parts of the babu bureaucracy disagree.

*Martin Ferera writes about Intertek:

Its larger Swiss rival, Societe Generale de Surveillance had slightly disappointing results but reported that H2 will improve over H1. SGS said it’s seeking ‘accretive acquisitions’ but dismissed any tie-up with IKTSF.

Intertek reports H1 results Aug. 2. Another rival, France’s Bureau Veritas, acquired Inspectorate at a pricy 18 EBIT ratio. M&A in the testing sector shows better confidence and cash flow. Some speculate that Intertek’s aborted takeover of business lines from the not-for-profit Det Norske Veritas of Norway may be back on at 12-14x EBIT, which looked expensive then but seems attractive now.

Investors increasingly have to turn to emerging markets for growth, a big positive for IKTSF where 36% of sales are booked there, and where its markets are growing. Intertek is expected to grow EPS by 16% and 12% over next two years. These factors explain Intertek’s recent share price appreciation and why Merrill Lynch made IKTSF its preferred play testing. Merrill says Intertek is trading at a prospective P/E of 13.5, slightly below its historic average.

He adds: “G4S (GFSZY) emerging markets exposure is at 26% and the aviation security and services firm also has a decent prospective growth of just under 10% and prospective p/e of 10.” I bought more IKTSF this week.

*The board of Portugal Telephone will into overtime (presumably to break a tie) starting their meeting at 5 p.m. Portuguese time on the bid for its half of Brasilcel, the company controlling Vivo of Brazil which Telefonica wants very much to buy. So we may have to hold on over the weekend before learning the outcome. We like PT for its 7% yield regardless of the Spanish.

*Stallergènes reported sales (but not profits, to be reported only Aug. 26) for H1 up 13% to euros 110.6 mn. The French maker of allergy products saw a pick up of sales by 14% in Q2 and a rise in subligual desensitising ones by 16%, to over 36% of total sales. Oralaire, against grass allergies, is doing particularly well in Germany and succeeded in tests in the USA. It will be launched in the Netherlands, Czech Republic, Slovakia, and Austria later this year.

Staloral, a sublingual treatment for mite allergies and mild asthma is succeeding in Phase III trials in China and another asthma regimen is also being planned there, for Actair.

STLEF expects profits to come in higher than last H1 despite the financial crisis and says 2010 sales will be up 10%, margins higher because of level spending on research and development, and more profits.

*Galapagos NV (of Belgium) and the University of Bristol announced a new drug discovery collaboration to develop a new analgesic drug based on the protein glanain for treating chronic diabetes pain (diabetic neuropathic pain). GLPGY’s BioFocus division will provide hit-to-lead and lead optimization services for a Wellcome Trust-funded program at the UK university. Total contract value for Galapagos could exceed €3.3 mn in research fees over two years. Galanin is a small protein which was shown to reduce neurpathic pain in models of different diseases, including diabetes.

*Deep vein thrombosis drug Arixtra from GlaxoSmithKline faces a global generic challenge by Dr. Reddy’s. The Indian firm will buy from Australia’s Alchemia fondaparinux sodium for injection (the generic version of GlaxoSmithKlines jab)for all territories outside of North America. They already have an earlier deal for North America. The amount of royalty to be paid was not released. RDY may wind up selling the drug thru third parties. GSK and RDY are both in the model portfolio.

A potential threat to GSK’s OTC obesity drug Alli was Vivus’ more risky prescription drug combo (Qnexa) which was rejected by the SEC’s advisory panel yesterday because it may have psychiatric or cognitative side-effects to say nothing of causing birth defects. Fat-fighting is not easy. This news should keep the GSK buying panic going another day.

*Aberdeen Global Income Fund (FCO) has been nibbling at Asian emerging markets. FCO has now 3.2% of its assets in Indonesian government and private sector bonds, 90% of the lot dollar denominated. It has 2% of its assets in Philippine debt, all in dollars, and 82% issued by the Manila govt. And it put 1.1% of assets into Kazakhstan bank $ bonds.

*Over at Bank of Nova Scotia, Scotiabank (BNS) , there have been Q2 investments in Thai banking. BNS’s 49% sub Thanachart Bank acquired 48% of Siam City Bank and then merged with it. Canada’s BNS put about C$650 mn into Thanachart to maintain its 49% stake. The combo is now the 3rd largest bank in Bangkok and the 5th cor Thailand as a whole. The deal, according to Michael Goldberg of Desjardins Securities, is “accretive to earnings.” Current yield is over 4%.

Both FCO and BNS got their feet wet in Latin American emerging markets. BNS picked up another Latin, R-G Premier Bank, last quarter, from the FDIC, in Puerto Rico, USA. According to Mr. Goldberg, this gives it critical mass with a 10% market share. We own BNS for its Latin America prowess but Thailand and Puerto Rico are fine.

*Ascendas India Trust Units, run from and listed in Singapore, invests in real estate in India and yields 7.90%. ACNDF is the ADR.

*With a drop in 2009 sales of 60% and a drop in EPS from 48 cents/sh to 2 cents, be grateful we bailed out of WSH Holdings, WH, Chinese maker of drilling pipe for oil and gas exploration. WH confronted both US “anti-dumping” protectionism and Chinese price-controls as oil prices cratered and steel prices rose, leading to hugely mounting debt by the Chinese firm to carry its remaining non-US customers domestically and in the Stans.

Vivian plans to stick with SLB (Dutch Schlumberger which is really French) and RIG (Swiss Transocean which is really American) in the oil exploration business, having also sold TS (Luxembourgeois Tenaris which is really Italo-Argentine.).Exploration service firms are very international apart from WH.

*After at least two readers bought round lots of Sued-Chemie your editor finally bought her miserable 25 in Frankfurt (am Main) yesterday at 2 a.m EST. I paid euros 98.5 and the SUC share closed at 102.5. One reader used a specialized US brokerage and the other Baloise Bank in Switzerland. I used my HSBC account but it required persistence.

I looked into a Basel legal offshore account but there are difficulties. If you are able to read German and are interested, here was their reply (which was accompanied by an incomprehensible English translation):

Der Sachverhalt ist leider etwas kompliziert. Geschäftsbeziehungen von amerikanischen Staatsbürgern sind gewissen Auflagen untergeordnet. Ich komme nicht darum herum, ein paar Fragen an Sie zu stellen.

1. Sind die anzulegenden Gelder deklariert (versteuern Sie diese)? (Wir benötigen eine Kopie der Steuererklärung).

2. Handelt es sich bei der Anlage um eine Summe, die CHF 250’000.00 übersteigt (heute ca. USD 240’000.00)

3. Wie stellen Sie sich die Anlage der Gelder vor? Wollen Sie diese selber vornehmen und per E-Mail kontakt aufnehmen oder wollen Sie eine Fremdverwaltung? (Fremdverwaltung wäre durch die Bank; E-Mail-Kontakte gelten nicht als sicher, Sie tragen im E-Mail-Verkehr ein Risiko.)

4. Eine Identifizierung Ihrer Person ist notwendig. Können Sie in der Schweiz vorbeikommen (sind Sie möglicherweise bei uns in den Ferien) oder können Sie uns eine Appostille für Ihren Ausweis zusenden?

Die ersten beiden Fragen sind dringend mit “Ja” zu beantworten. Bei Frage 3 ist die künftige Kommunikation zu berücksichtigen, bei Frage 4 ist der Aufwand der Beschaffung der korrekten Daten relevant. Bedenken Sie, dass eine Kontoeröffnung mit Originalbelegen auf dem Korrespondenzweg gewisse Zeit in Anspruch nimmt.

Ich hoffe, Sie können mit den erwähnten Bedingungen/Auflagen zurechtkommen. Dann steht einer Kontoführung meines Erachtens nichts im Wege.

Freundliche Grüsse

My responses were 1) ja 2) nein 3) e-mail 4) no Swiss vacation plans short term. The paperwork is comparable to what was sought by boom.com (in Hong Kong) which another reader introduced me to. At least boom.com is cheap, English-speaking, and electronic, more than can be said for the Swiss.

From Institutional Investor, which I used to write for in Paris, I got this:

In the article titled “Al Gore’s Fund Suffers and Green Investors are Seeing Red,” which appeared on our web site on July 13 and 14, we wrongly stated that the Generation Global Equity Fund was, according to its Securities and Exchange Commission filings, worth only $2.4 bn at the end of March 2010, having originally been worth $5.3 bn when it was closed to new investments in 2008.

We accept that these figures are wholly incorrect. The Fund’s SEC filings state the value of the Fund’s U.S. investments only (which at the end of March 2010 were approximately $2.6 bn), and not the value of the whole Fund. We understand that the value of the Fund at that date was $5.6 bn, and that the Fund has therefore grown in value since 2008. We apologize unreserverdly to Generation.

There’s more but you get the drift. II managed to set off legal pursuits by the veep’s employer without even mentioning Gore’s curious sex life, his embonpoint, or his split from Tipper.

More about writing English, correct statistcs, and other corrections follows for paid subscribers. News from Spain, Portugal, the Netherlands, Britain, South Africa, Israel, China, India and Panama.

First a message from the anti-Vivian, Leila Heckman. Vivian does bottom up and Heckman is the pioneer of top down country allocation research and an expert in quantitative analysis, macro economics, stock selection, and portfolio optimization with expertise in developed, emerging and frontier markets. She asks:

Over the past month, investments in Europe have increased 7-8%. Have investors’ worries about investing in the European market and contagion dissipated, or have they just quieted for the moment? Is Europe poised to bounce back?

According to Heckman, now Senior Director of Mesirow Financial, people are quick to forget crises, including those in the financial markets. She thinks while Europe’s bailout will likely take place over an extended period of time, there are several positive market drivers indicating that there are good investment opportunities now.

Currently, Heckman believes the most attractive European markets include: Turkey, the Netherlands, Spain, and Norway.

Heckman has over 20 years of experience specializing in country allocation modeling and international equity investing. Previously, she was the senior managing director and head of international equity for Bear Stearns; founder and CEO of Heckman Global Advisors; and head of global asset allocation for Salomon Smith Barney. Her Interactive model is built on a scoring mechanism. Each month it compares the markets under coverage on the basis of quantitative investment factors that have been shown to convey information about future equity returns in research by academics and practitioners, including ourselves. These indicators include valuations, growth indicators, macroeconomic indicators, and measures of momentum. The factors and the weights we put on each one are shown below. Each month statistical scores are computed for each factor, and a total score is computed for each country as the weighted average of the individual factor scores. The weights on each factor are determined by the strength and reliability of each factor in back tests. Each country then gets an allocation relative to the benchmark roughly in proportion to its total score, with restrictions on the maximum allocation to avoid unrealistically large exposures. Each month performance of the hypothetical portfolio is compared with the benchmark.

Here is another important note from Information Line, a hard money newsletter, of interest to all US investors, by Vernon Jacobs CPA. He writes that the Foreign Bank Account Report form used by the Dept of the Treasury for many years to collect information about American banking and investment accounts overseas, which have to be reported if they total more than $10,000, is about to be supplanted by new rules. Mr. Jacobs writes about the Housing Act to Restore Employment (HIRE):

“Questions about what must be disclosed on the FBAR form may soon become a moot issue. The recent HIRE act incluedes a new requirement to report foreign financial assets – which is much broader than foreign financial accounts. This new form is to be effective for tax years beginning after the effective date of the HIRE act which was March 18, 2010.

“For most individuals, that means it will be necessary to discolose any foreign financial assets with their 2010 income tax return – but only if the total of those assets exceeds $50,000 at any time during the year.

“Unlike the FBAR form, the new and expanded report of financial assets is to be included with the income-tax return of the ‘person’ that has foreign financial assets that must be reported. The law specifically mentions that the report should include information about foreign securities, financial instrucments or contracts and any ownership interest in a foreign entity. The law also gives very broad authority to the IRS to develop regulations to implement the law and to exclude assets that are being disclosed in other reports.

“Even so, it seems likely that there will be a duplication of reporting in the new HIRE act asset report and the FBAR form. One of them goes to a part of the Treasury Department that is separate from the IRS and is not part of an income-tax return. The new asset report will be required as part of a tax return.”

For his readership, Mr. Jacobs then worries about how holdings of gold bullion or silver will be dealt with under the new rules, which probably is irrelevent to most of us. Mr. Jackobs has written a half dozn books on international taxes and writes the twice-monthly International Wealth Protection Monitor newsletter. He is producing a new edition of his Guide to Reporting Foreign Financial Accounts. www.vernonjacobs.com Information Line is published by info@assetstrategies.com

-Barclays is skeptical that we are in for another economic decline. So, it recently advised clients to continue accumulating stocks on corrections, favoring sectors with a strong demand base across the major economies.

-Credit Suisse Securities recently told clients we are in an environment of healthy corporate balance sheets and a fair amount of excess cash, but a decidedly un-exciting medium-term growth outlook for the average US corporation. As a result, it expects U.S. corporations will increasingly focus cash flows on increasing dividend payments and share repurchases.

-Bank of America Merrill Lynch reminds clients the strong role dividends have played over the years. “If dividend tax rates stay aligned with capital gains rates, we think companies will raise dividend payout ratios significantly over time.”

Note that there are two meanings for double dip, one for the economy as a whole, and another, quite different, for the stock market. The two do not move in phase.

Here is a bullish take from Steve Chun of Miller/Howard Investment research:

“There are some interesting features in the current landscape that may auger well for equity investment–which 2009 amply demonstrated is not all that closely correlated to the larger economy in the intermediate term. Corporate cash and noncorporate funds available for investment (even excluding funds that might be switched from bond positions) have never been higher, measuring in the multitrillions. The rate of improvement in corporate operating margins has grown faster than any period for which we have data.

Astonishingly, some sectors such as Technology and Consumer Discretionary show margins that are off the charts on the upside, higher than ever! Corporations are as lean as they have ever been, and they have more cash than they’ve ever had. This is a nice prescription for an era of mergers and capital expansion if necessary (though capacity is fairly ample). The former would shrink the overall capitalization in the market, a market that is already rather small compared to the funds that could be available for equity investment, as we’ve pointed out on a number of occasions, if those funds were of a mind to get to work.

“Cash available, rapid margin improvement, moderately negative investor sentiment, and the help that might come from still-growing economies to the south and east of us could make for a potent brew boosting stock prices—a configuration that tends to get lost in the constant news flow about sovereign debt troubles, tax increases, and an overall ‘Age of Austerity.’” Miller/Howard is at (845)679-9166.

Moody’s today downrated Portugal by 2 notches to A1 while citing weak growth and mounting debt. It said the reform measures will take time to kick in.

The euro today did not collapse against the greenback on the news. It may be that panic about the single currency has played out. Or it may be that poor US May trade figures (showing a mounting $42.3 bn trade deficit, mostly with China) kept the dollar down. More about China for paid subscribers below thanks to a special survey shared with us.

Chartists are carefully watching gold. The precious metal has apparently hit its trend line 5 times according to Dutch analyst Charles Nenner, which may signal a reversal. But he is sititng on the sidelines all the same.

Your editor will be doing a tour of the River Duoro highlands east of Porto next month, her contribution to Portuguese recovery, thanks to a 30% senior price break in the government-sponsored network of Paradors, and the offer of an air-conditioned mini-car at the same price as a hot one. Paradors are hostelries built in old castles and convents to encourage tourism in remote regions. They were built under Salazar in Portugal, imitating the Pousadas built by Franco’s Spain. Even without the discount most of them are great bargains. Your credit card only gets swiped when you sign out, so I am hoping for a weaker Euro.

Switzerland struck a blow for liberty by freeing French-born film director Roman Polanski rather than shipping him off to the USA for a trial on very old statuatory rape charges. Having given way over secret Swiss bank accounts I guess they had to find another way to show their independent spirit.

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