Yesterday was Veteran's Day here, Armistice Day in many other countries, and Singles Day in China. The latter is the top shopping equivalent of Black Friday in the USA, reportedly recently invented by e-commerce giant Alibaba, and targeted on the un-wed (those 4 ones all in a row.)

Joe Shaefer, USAF-Ret., with whom we trade newsletters, for years has sent a letter to his readers and friends for Veteran's Day. His views on “Those Who Stand and Wait” were published on the op-ed page of The Wall Street Journal. Joe puts out a newsletter and runs money as Stanford WealthAdvisors.

My note yesterday about tides reversing has opened another question. Are US Dow-Jones Biggies or S&P 500 middie firms going to revert to the mean? Or can they continue to grow faster than US GNP growth, as they have done for the last 3 years?

I am firmly on the side of Jeremy Grantham (of GMO) on this. He told Barron's:

“Profit margins are probably the most mean-reverting series in finance. If profit margins do not mean-revert, then something has gone badly wrong with capitalism. If high profits do not attract competition, something [is] wrong with the system and it is not functioning properly.”

So how can a company grow profits faster than the country?

The answer is via structural changes. Firstly, big US firms are ever heavier exporters. So they are not linked to US GNP alone. But this assumes that they can continue to boost their exports. A strong dollar makes this much harder.

Moreover, top US stock firms are switching from selling stuff to selling services, on which margins are normally higher. US national accounts service data (and that of other countries) is not as good as on goods. But the service feed into profitability doesn't repeat forever. It is a one-off which sets a higher level profits have to meet the following year.

Another way up ahead of the USA is through technology-generated productivity gains. But again this is a one-off. You can only upgrade your systems every decade or so. At some point productivity will run into a shortage of labor, a factor so far missing from the US equation. When that triggers wage increase demands, the game is up and productivity stops rising.

How soon will the US market lose its edge? Reuters thinks surprisingly soon. It reported that calculated estimates for Q4 earnings growth at the end of October were 7.6%. But a mere month earlier the Q4 growth estimate was 11.1%.

For Q1 2015 the estimate now is 8.8% vs the one Oct. 1 of 11.5%.

Making this more ominous, according to Nick Raich, CEO of The Earnings Scout of Cleveland, the drop in 2015 Q1 is likely to be greater at the end of the month.

The other indicator of troubled waters ahead is the guidance given by US companies, something only a minority do. Mr. Raich says that negative outlooks outnumber positive ones for Q4 so far by about 3.9 to 1. For Q3 the ratio was 3.3:1. “That's a worsening trend”, he told Reuters. “The outlooks have gotten a bit worse this quarter.”

Outlook numbers are massaged by corporations to keep down negative earnings surprises, which hit stocks hard. And as Mr. Raich notes, most of the estimates came in before the recent rocketing up of the dollar.

I make these comments not in order to hurt my US stock portfolio, but to remind readers that the current trend against global investing, which is what we preach and practice, will not continue forever. It never has failed over multi-year periods in the past.

Presubscribers who want to pick up a cheap subscription are invited to hit biddingforgood.com and aim to buy to help Lilith Magazine fund-raiser. Five days and about 8 hours remain for bidding which is currently stuck at $175 for a full year. I and one of my daughters-in-law support this mag. You can also see goods and services from other charities on the site.

UK, Ireland Quarterlies

*Vodafone Group PLC this morning reported that performance was improving across its key European markets, although the U.K. wireless giant posted a sharply lower H1 profit, depending on how you slice things. It uses a Mar. 30 year end.

Net hit GBP5.42 bn this year ($8.59 bn), vs GBP 17.95 bn in H1 2013 before the sale of its stake in Verizon Wireless and taxes on the deal. Operating profit before exceptional items fell only 30% to GBP 1.76 bn, a better indicator of future profits I think. It said revenue excluding acquisitions, disposals and currency effects was down 3% to GBP20.75 bn but up 8..9% on a reported basis.

FY Q2 revenue in Africa, Middle East and Asia Pacific, including India, rose rose 7.9%, our main reason for buying VOD. These are the fast-growing telecom locations.

Q2 revenue excluding handset re-vendor sales and excluding M&A fell 1.5%, an improvement from a 4.2% drop in Q1 and a 4.9% drop in H1 2013. Europe revenue slid 5%, compared with a 7.9% fall in Q1, as customers subscribed to more expensive plans and used more data. Revenue fell only 3.4% in prosperous Germany, and was negative in Portugal, a market back in play (cf below). VOD wrote down its European wireless and other telco ops by GBP 6.9 bn earlier this year.

Vodafone is spending the proceeds from its $130 bn sale of 45% of the VZ jv by boosting network speeds and upgrades which it believes will result in higher sales and profits in developed markets.But it is also investing in cellphone financial services built on its Kenyan Safaricom African cellphone breakthrough.

"Vodafone is doing better. Our investment is starting to be visible," said CEO Vitorio Colao. "I expect the trend to continue." VOD upped its interim dividend to 3.6 pence/sh, up 2% from last year. VOD rose 5.4% in UK trading yesterday.

*Also reporting from yesterday, on its Q3, was CRH plc of Ireland which beat forecasts. Its sales, including acquisitions and divestitures, rose 7% y/o/y to euros 14 bn ($17.45 bn) from prior year Q2. Like for like (organic) salers were up 3%. Its earnings before interest, taxes, depreciation, and amortization, or EBITDA, a measure of cash-flow, hit euros 1.2 bn, vs prior Q3 level of 1.06 bn. It expects full H2 EBITDA growth to hit 10% vs a negative level in 2013 when its EBITDA and net income were nipped by M&A and capex.

The stock fell because of a poor showing in a European construction industry hit sales of aggregates in its nearby market. While US sales rose 6% in the quarter (vs 4% in H1 where weather was bad), European sales fell 2% in Q2 (vs rising 6% in H1 where particularly favorable weather conditions helped). The importance of weather in infrastructure sales tends to smooth out over time and conditions regress to the norm.

Cantor Fitzgerald and Liberum Capital reiterated their hold rating on CRH before the results came in but Cantor also put out a $23.82 target price. The consensus TP is $25.2 at Analyst Ratings Network (ARN), which reported on CRH as a British company despite its being Irish.

We bought for the European recovery, and though it may tarry, we still believe. The share is at $22 now, down 0.7% on the earnings beat and down 8.9% since we got in. Yield is a bonny more than 3.8%.

Oi Tries to Hang Up

*Brazil's Oi has rejected the euros 1.35/sh takeover offer for half or more of Portugal Telecom SGPS by Terra Peregrin which is Angola-owned. Oi owns only 10% of PT outright. PT owns 25.7% of Oi outright under a half-way merger last year, truncated by the failure of a Portuguese banking family. But PT also owns veto rights to any deal to sell it. Oi wants to divest its stake in PT to Altice of Luxembourg to use the money to invest in buying out Telecom Italia's Brazilian network.

The run-in of insiders leads me to wonder: where are the class action lawyers when a clearly unfair bidding process is going on? Since PT is NYSE-listed they have an entry.

Analyst Updates

*A uranium analyst at H.C. Wainwright predicts that spot prices for nuclear fuel could hit $50 in 2015 as more Japanese and emerging markets power plants come back on stream or are launched. Its Jeffrey Wright put buys on Uranerz Energy which your editor owns, up nearly15%; but Cameco is also up nicely. CCJ.

*The selloff in emerging market stocks has taken down Vale of Brazil, on whichCitigroup put a sell advisory yesterday because of lower iron ore prices. CI says that Vale will be able to only make $7.5 bn in operating cashflow in 2015 and this will result in lower capex not just for investment, but also for maienance according to ARN. It is expects to sell assets and raise debt. It is off 3%.

*Nokia signed up as an original equipment mfr for SAP, the accounting software firm, supplying digitized maps and other location content from HERE to corporate clients of the German firm's HANA line.

Singles Day Sales

*We sold Cosan at least at $9.53 per share. CZZ it announced that it is studying the creation of a 3^rd sub covering gas distribution, alongside logistics and energy. This would include the Raizen gas, Comgas, and its stake in Sao Paulo's muni gas co.

*Yesterday we sold our real estate play on Russia, another portfolio loser. Raven Rusis a UK-listed firm investing in logistics and warehouses in Russia, where the sinking ruble will hurt. RUS-AIM is also at risk because US trading of these shares is being cut back by our ever-less global on-line discount brokers.

*At Chris Loew's urging, we also are putting a sell on a gainer, Japanese tractor-maker Kubota, KUBTY, selected for the sinking yen. Anticipation has been greater that sales growth, and our shares are up 18% in a half year which Chris says “is not bad appreciation.” He writes:

A slight rise in revenues but operating profit diffped 0.1% consolidated in H1 (toSept. 30.) Revenues showed the negative impact of front-loading buyers trying to beat the sales tax increase. It anticipates a further contraction of 1.2% in operating profit in the remainder of the FY to Mar. 31, 2015. Despite the buoyed yen, flat forthcoming figures will eat into those gains. Let's harvest them.

So Sayonara Kubota. Aim for $77 or better.

Fund Notes

*Fibra Uno made a new 52-wk high in Mexico trading at NMP 48.4, helped by a peso decline linked to political uncertainty, a scandal over the President's wife's housing investment and an occupation of the Acapulco airport road over the murdered teaching students.