The afternoon after I last filed my blog I headed for the computer repair shop a few blocks from where my husband was born to pick up the notebook, which I am now writing on. The store owner, whom we have known for about 15 years, had flown off to Pakistan because his grandfather had died, and we met the person more or less in charge of the business in his absence, Dave, aged 14. I know Dave is not an Islamic name but that's what he calls himself. The young man is not into IT; he has determined to become a lawyer and has already at his quite young age enrolled in university level summer school programs in law at Cambridge (and last year in Oxford) to reach his goal more rapidly. (In Britain people study law as an undergraduate subject rather than after their BA.)

Since I am familiar with the behavior of 14-year-olds all I can say is that Dave is a stunning product of British free education in a depressed part of London combined with tough parental pressure. He speaks posh with no trace of an accent or dropped aspirates. I assume his name is an Anglicization of Daoud but I didn't dare ask because it would not have been politically correct.

And as you can see the computer is now working fine although I suspect Dave had no role in the replacement of my broken screen after I dropped the thing.

I am in Paris where the start of the holiday month is taken very seriously indeed. Last night when we went out to eat there were almost no available tables in the Marais neighborhood where we used to live and we finally wound up at a great Chinese restaurant opposite the Tour de l'Horloge on the Rue St. Martin, called Iris. It proved that even a basic Chinese meal in France is miles better than one even in New York City. But the August effect no longer is confined to French firms. Everyone rushes out results.

To quote the CEO of one of our companies during a conference call today, “we try to keep summer calls short”. Unfortunately companies like his are also anxious to report before compulsory vacation begins in most of Europe where the 2-week period allowed to American workers is considered barbaric and equivalent of slavery. More from this company on its last quarter from Ireland, and similar reports others in Spain, Israel, Canada, Colombia, and Brazil, plus mere news from Finland, Mexico, Singapore and many of the same countries again.

Earlier i saw a long-expected reversal of US market rises because better growth is expected to result in less support for financial markets from the Fed. And the USA grew 4% annualized in Q2. It is a good-news-is-bad-news phenomenon not helped by messy quarterly results especially from banks aboard.

*To begin with on the latest horrible news about Banco Espirito Santo accounts, its 2.1% shareholder Portugal Telecom fell below my latest acquisition price of $2.30 to $2.18. I am not buying more stock. This too shall pass. PT may even have the option of converting its defaulted loan to a parent of BES into shares which can be sold. The selloff is irrational but I am now fully invested.l

*The quote about August was from Richard Pops, CEO of Ireland's Alkermes. He explained that the key to ALKS going forward is CNS (central nervous system) drugs, delivered via LAI (long acting injectables) easy to use thanks to PFS (prefilled syringes). Keep these acronyms in view. ALKS as expected reported sales up 11% in Q2 thanks to a whopping rise in Risperdel and Sustenna sales to a co. total of $153.4 mn. However expenses rose to $176.2 mn because of hefty R+D spending on its pipeline, resulting in an operating loss of $22.8 mn, up 269% over prior year Q2. Net income after adjustments for royalties and other factors fell to $3.7 mn, off by half from Q2 2013. This is not too worrying for drug startup.

However the guidance for 2014 overall was also cut because of expenses for new drugs, starting with Aripiprozole, a new long-lasting jab for schizophrenia, which Pops expects will go to the US FDA for new drug approval in the current quarter. In addition, ALKS is spending on 2 further hot pipeline drugs, 5461 against depression which doesn't respond to other meds, fast-tracked by the FDA last month, and 3831, a combo drug against schizophrenia incorporation an new opioid antagonist with olanzapine, in phase II trials.

Guidance was for net operating loss for the calendar year of $90-110 mn vs an earlier estimate of $70-90 mn. Moreover EPS loss estimate was raised to 62 to 70 cents from 48 to 61 cents earlier. I am bipolar about ALKS which we bought as a target for tax inversion. If its results are poorer, it is more likely to become a target for a US acquirer especially if this results from its R+D spending. I think the fall of the stock by 7.7% yesterday was a sign of market depression which counts as a CNS disease of stock markets requiring a LAI, preferably using PFS.

*Also reporting was Vale which saw production rise 13% in its principal iron ore business but prices fall 18% (both vs Q2 2013) to 79.4 mn metric tonnes and $81.03 per tonne respectively. It is not actually selling all that ore at these levels, but storing it in Malaysia in a half-filled stockpile site. The reason is to save money and this seemingly wacky way to supply China has cut costs ~$610 mn contributing to cash flow savings of 25%. Also helping out were higher prices for another components of stainless steel, nickel, and huge increases from a low base in phosphate output. CEO Murilo Ferreira, whose name in Portuguese means blacksmith, hinted that VALE is seeking partners to take some of its fertilizer assets over.

The real bite in Q2 was not merely that all that iron ore was sitting in Malaysia. It was also that about $1 bn was taken out of profits for various things: $500 mn for the writeoff on the Guinea Simandou project which the Conarky govt determined had been acquired by the seller to Vale by bribing a former president's wife; $247 mn for a shuttered Australian coal mine with Integra; and the rest in fat taxes to Brasilia. Despite these nibbles, Vale kept its dividend flat and also did not add to debt.

How they did it, according to Ferreira, is hard for me to understand. He cited capital expenses going down because of “optimization, commercial negotiations, and project execution”, whatever that may mean. Carefully scanning the conference chatter, I think it means that bad suppliers were removed, and they got some edge from the decline of the real (the Brazilian currency) and re-negotiating some contracts. Q2 earnings before interest, taxes, depreciation and amortization came in at $609 mn. Normally I would worry about dropped cap ex but amidst the jargon I think that Vale has done some smart work.

*Guerilla warfare in Colombia took down the Cano Limon-Covenas pipeline for past of its Q2 and the result was that Ecopetrol consolidated profits were zapped. Sales actually rose thanks to stockpiled products in Colombian ports before the outage, and because of new production in Angola and on the US Gulf of Mexico, hitting 17,749 trillion pesos, up 0.9% in pesos, or dollars $9.43 bn. This doesn't account for the rise in the COP against the greenback during the prior 12 months. EPS in COP fell 11.7% to 69.26 per share but the US$ fell in the last year. I do not have the comparables to hand and the US wire services are still asleep.

Of course EC homeland counts for the most., Operating profits vs Q2 2013 were down 17% to COP 5.883 trillion again not counting FX changes. Net proftis fell 18.2% to COP 3.287 trillion. Earnings before interest, taxes, depreciation, and amortization, a measure of cash-flow, dipped 14.3% but the EBITDA margin remained flat at 43% of sales. EC raised $2 bn with a 31-yr bond issue during the quarter. It will restate its data in dollars next week, I hope. The results were audited and approved by its senior shareholder, the Bogota govt today.

*Cameco in Canada beat forecasts for Q2 by 2 cents (Canadian) at an adjusted 20 cents per share. Gross profits rose 37% to C$127 mn on which GAAP profits rose 274% to $127 mn or 256% per sh, 32 cents. That was then cut because of adjustments to reflect reality including: a higher price in Canadian dollars which upped profits because of foreign exchange factors; a lawsuit settlement which produced a one-off inflow of $28 mn; and complicated deals to end the Springfield Fuelsglobal laser enrichment plant where GE and Hitachi wanted out, giving CCJ some solace money but also resulting in its cutting its valuation of the asset.

CCJ gave a good outlook based on higher demand for uranium whose price has held up over the YTD period. New plants in the US and restored ones in Japan will boost urarnium demand. While this should normally result in higher spending on capex, a further problem at Cigar Lake, the new mine in Saskatchewan will actually reduce spending this year. Now with the delay to better freeze the mine site (to cut flood risk) only 22.8 mn to 23.3 mn lbs or uranium will be produced. That means cap ex will also fall because other exploration is being held up. The result will be that revenues will rise 5 to 10% this year over last mainly from new demand.

*Banco Santander came through with excellent numbers during a day of desolate banking results thanks to Spanish exceptionalism. Net income rose 38% in Q2 to euros 1.45 bn thanks to a drop in non-performing loans in its home country and a resulting lower bad loan ratio. While the numbers are small they feed right to the bottom line. Also helping was a 60% rise in profits in the UK where about 20% of SAN's profits are earned. Its Latin America lines which kept it going during the pain in Spain are now not as crucial, but of course they are still there. WhileBNP Paribas here in France, Die Erste in Austria and alas Bulgaria, and of course BES fell into a black hole, SAN gained from half year profits in Spain rising an incredible 80%. Its CEO said that Argentinian default would have no impact on profits in the current quarter. Brazil, where earnings fell 18% in Q2 because the real fell vs the euro and because loan spreads fell, is also no longer as crucial.

*Teva also reported after its board smartly turned back dissident shareholders voting against approved candidates, showing their discontent with the Israeli generics firm's strategic direction. Teva is in fact returning to its roots according to its quarterly results, back to Copaxone and back to generics.

Its GAAP eps hit 88 cents and its non-GAAP $1.23, both a penny ahead of forecasts by analysts, and flat on prior year thanks to US generics sales. Overall revenues rose 2.5% to $5.045 mn, half from generics and half from its own patented drugs. This offset some problems in Japan and API (pharma inputs) which fell.

As its new generics chief Sigi Olaffson told the conference call, Teva used to be “the Yankees, the Manchester United of generic” drugs. It is still the world leader and now busily adding biosimilar expertise to the old test-tube business. Mr Olaffson shares the presidency with another expert in patented drugs, under the new structure.

Overall, copycat drugs accounted for 32% of profits vs 25% a year ago. Generics sales globally were up 4.3%. The changes from GAAP earnings reflect debt repayment (debt is now only 1.89 x cashflow) and other adjustments for taxes which were much higher because some incentives had run out. But lest you think Israel's Teva wants to move, note that Eyal Disheh, CFO, told the conference call that Israel taxes Teva at under 10%, the lower level in the drug world.

Copaxone, the multiple sclerosis drug which may lose patent protection this year (it's up to the US Supreme Court) gained sales by converting pateints to 3x a week jabs from daily, using a new 40 mg formulation of the MS drug. At the end of June 17% of patients had been switched; now the level is said, not by Teva, to be as much as half the patients after 22 weeks of 40 mg being on the market, bringing their numbers close to the 65% target for end-2014.

How the Supremes rule is of course a key to Teva results and its legal eagles are collecting amicus briefs and citizen petitions to keep the MS drug from being hit by generics. Teva says that a Mexican generic being widely distributed there has dissimilar effects on patients and may even exacerbate their MS symptoms because it is not in fact equivalent of Copaxone.

For the year, Teva offered two versions of its outlook. If Copaxone keeps its patent it will earn $4.90 to 5.10 per share, a 5% hike from the prior company forecast, on sales of $19.8 bn to 20.8 bn, up 2% from prior forecasts. But if Copaxone loses its patent, EPS will be only $4.50 to 4.80.

What is Teva investing in next? Dr Michael Hayden, chief scientist, answered that it is focused on biosimilars to treat pain and CNS diseases, given the aging population, plus respiratory and cancer drugs. It is working on biosimilars. It is not very present in two areas of drug research where it now is using partners: ophthalmology and dermatology. But maybe it will go alone into these fields.

Now for news.

*Chicago Bridge and Iron won a new contract with Chiyoda to reverse the vast Texan gasification plant at Golden Pass to liquefy natural gas instead. This is being done on behalf of a jv of Qatar Pete and Exxon. Currently, the palknt produces 15.6 mn tonnes per year of liquefied natural gas. The reversal will need US Federal Energy Regulatory Commission approvals which CGI is helping acquire. The site at Sabine Pass is huge.

*Buy on the dips seems to be the word as Nokia's profit sharing plan is buying its own shares. The workers in Finland may be comforted with capital gains from NOK if they are fired by the new owner of their cellphone facilities, Microsoft. NOK fell 3% today in the wake of yesterday's rollback of US stock gains YTD.

*It took a sharp Wall St. drop to keep Paddy Power plc from rising some more today. PDYPF.

*The same for Reckitt Benckiser, RBGLY.

*Despite the reaction Global Logistic Properties flew higher today in Singapore. GBTZF signed a distribution deal in Guangzhou earlier this week on behalf of BMW.

*Bombardier fired on both transport cylinders, booking a firm order for 5 G400 Next Gen planes from Encore, the procurement sub of WestJet, which had been options. This is worth $168 mn. And it also did a similar sized deal for an unidentified airline presumably also worth $168 mn (based on list prices). Meanwhile its railroad arm won a firm order on the last day during which the French function, for 22 Francilien commuter trains for the SNCF (national rail system) and the Ile de France railway, for a total of $162 mbn.

*Barrick Gold, whose bonds we own, took a $500 mn charge to exit a bad project in Saudi copper and named two new board members and 2 new co-CEOs to replace Jamie Sokolsky. It now produces gold at a cost of $900 to 940 per ounce when the metal sells for $1300; last year its costs were $980. These are US dollars. The new board members are Nevadan Brian Greenspun who ran a newspaper and advised Bill Clinton; and a buddy of Chairman John Thornton from Goldman, J Michael Evans, a Canadian.

*Iam Gold began commercial gold production in Westwood, Quebec, boosting its output 25% and cutting costs and of course also political risks. IAG fell twice as fast as the gold price yesterday, over 2%.

*Agrium shut in its rickety Vanskoy Saskatchewan phosphate mine and brought forward its plans to improve the site. This will possibly nip AGU earnings this year.

*Our Frida is not a Russian oligarch but her favorite maker of kitchen counters, Caesarstone, is being hurt by the new embargo on Russia. However, it is vastly increasing its output levels with a new plant near her Georgia home (US not former Soviet GA) so I suspect we will win in the end. I may even order some new CTSE counters for my own kitchen, currently featuring vinyl. It reports on Q2 Aug. 6; Israelis do not observe the August vacation rule, apparently.

*While my theory that gold is a useful diversifier against market busts did not pan out yesterday, my exchange-traded fund play on volatility, UVXY, rose 16.7%.