S Holiday Season Stock News

Wall Street is up and rising to highs.

At reader insistence I am making further 2014 forecasts today, if reluctantly. Note that I am not a stockbroker groupie booming new placements at this time of year. Nor am I a herd-follower who has to pick the same fave stocks as others. I call markets as I see them. If I see them...

It's hard. Politics are not easier than markets and they relate.

What will the corruption inquiries into PM Erdogan do to Turkey's strategic and stock market appeal? will the Imam faint or recover? Is Turkey still a model for reformist Muslims?

Can the UN stop the slaughter in South Sudan? Who can halt the horror in Syria? Both impact the gold market.

On an off-day like today, the yen has fallen to 105 cents on the buck. 105 pennies per yen on the wall, 105 pennies per yen. If another cent hits the wall, 106 pennies per yen on the wall. And now PM Abe has defiantly turned up at the war crimes monument. The Tokyo stock market is racing ahead but can this continue?

Thailand killing demonstrators. Will this deflect the Yingluck Shinawatra election plan, the economy, the baht?

Ukraine resumed beating up anti-regime journalists. But PR-minded Putin is easing up on dissent. Which trend will win in Russia and Ukraine? Should we buy Russia stocks?

Mexico has ended the Pemex monopoly with a constitutional amendment. Will this trigger a boom in Mexico City's bolsa?

Now that Eike Batista and the real are marginally higher, is Brazil again the country of the future? Or not?

Hopes for a nuclear peace deal with Demon America have boosted the Teheran stock exchange into the best performer in 2013, up 133% according to Bloomberg, most of the gain after Hassan Rouhani was elected president last summer. To buy on the bourse, Iranians are selling gold. Can this go on? Can we benefit?

More for paid subscribers on markets and some scattered bits of news from around the world: Israel, Norway, Ireland, India, Britain, The Netherlands, Jordan, and Canada.

IMHO, 2014 cannot possibly be as good for shares as this year has been and not because of reversion to the mean. Federal Reserve tapering will begin next month and other regulatory moves in the US and elsewhere will at the same time cut back bank lending. The liquidity which boosted stock markets will not repeat. Earnings will lag 2013 levels (and negative guidance already has begun.) Correspondingly, p/e ratios will not rise to infinity.

This may produce unexpected results. My guess is some neglected downtrodden parts of the investing firmament may revive in 2014: gold (now that Iranians have sold out); bonds; emerging markets.

I'm no longer buying mainstream large cap stocks or even holding them forever. I am avoiding the sale of big gainers in 2013 for tax reasons, but aim to sell some early next year. 

*The best Christmas news came from a few miles from the Little Town of Bethlehem. Delek Group (DGRLY) is plotting to reverse the cross-Sinai pipeline to deliver gas from the huge Leviathan offshore Israeli field to Egypt. This would allow BG Group (BRGYY, sold), ENI, and Union Fenosa to fully utilize their Nile Delta gas liquefaction plant which has not been functional since Mubarak was overthrown. Israel will have a chance to show greater maturity than Egypt did, when it cut off gas supplies to Israel Electric Corp 2 years ago claiming there had been corruption and bribery in the contracts with the former regime. Offering gas business to Egypt (and Jordan which was also cut off post-Mubarak) makes brilliant political sense but I am not sure Jerusalem sees this.

The worst Christmas news came from the same company, DGRLY. It announced on Christmas Day (hoping nobody would notice?) that it had sold 3% of its Phoenix insurance arm to put the NIS 90 mn raised into energy development. We called Delek's Yitzhak Tshuva an Israeli Warren Buffett because of its then 55% stake in Israel's largest insurance firm, a stabilizing factor for the group since control was acquired in 2006 by Delek buying out  of the US. Today both PHOE in Tel Aviv and DGRLY in the US are down on the news.

*Now that I have bought physical gold via our advertiser bullionvault.com, I am a catastrophe freak. The South Sudan civil war has boosted the price of the yellow metal, our new SPDR Gold Shares (GLD), and miners IAM Gold(IAG) and Barrick(ABX).

*With Toronto also closed, the loony and Canada shares are continuing their rise on Wall St today. Apart from the goldminers, our Canadians are mixed with CAE and BNS down along with Mongolian Growth Group (MNGGF) while Canadian Solar (CSIQ) is shining.

*Meanwhile some out and out winners in 2014 are under pressure. Start with Ireland's Covidien(COV) which Brett Arends in today's Marketwatch says is ahead of itself. I am not into reading palms but there is a troubling bit of news about COV, from Globes Israel. Thanks to Given Imaging dissidents against its sale to COV the Israeli website learned that COV tried to buy Given (GIVN) at $19-22/sh in 2012. This year it paid $30/sh in a deal Given shareholders have to vote on Jan. 23. GIVN is controlled by IDB Holing Corp which was accused of selling too cheaply.

The problem is not GIVN. Why did COV follow up the first bid with such a high one?

 

*Dr Reddy's Lab (RDY) hit a new NYSE high of $41.18 before falling back. It was tipped as "bull of the day" by momentum analysts at Zacks, Christmas Eve in a report then reprinted on investor's keynote and seekingalpha.com which were looking for things to write yesterday. Zacks argues that generics will gain from Obamacare setting itself to rights noting that RDY has 8 foreign and 4 US domestic plants which meet US regulatory concerns. It has 76 abbreviated new drug applications (ANDA) pending with the FDA for new copycat drugs.

Meanwhile, in India, RDY's chairman G.V. Prasad boasted that it had achieved a critical mass which would build it into a dominant global player. In a Christmas Eve lecture reported by Business Standard, a local newspaper, he said: "I am very comfortable about risks we are taking. We have restricted ourselves to the pharmaceutical business." Maybe his overconfidence scared the US market.

*If never buying non-drug firms were all it takes, RDY would not have come a cropper in Germany. And why would Teva be in such difficulty? The hot contender for TEVA CEO is now Erez Vigodman, an Israeli, CEO at crop protection chemical firm Makhteshim Agan, a Harvard Biz School grad and CPA accountant with a background in the food industry. He was and is on the split Teva board and was one of the supporters of Teva's wild shopping spree before Dr. Jeremy Levin was named CEO. He was an alternative candidate then.

*Having said all that I think drug shares will do better in 2014 in part because after they have bought stocks, Iranians will also celebrate becoming more normal by making more purchases of drugs, especially generics. Whether they will be normal enough to buy drugs from Teva I doubt. But it should help Hikma Pharma (HKMPY whose ADRs are on the UK stock and not trading today) and RDY.

*Our Russky plays were mixed. While Yandex (YNDX) is up again (since Amsterdam is open) Raven Rus is flat because London is celebrating whatever Boxing Day may be. YNDX, GB:RUS.

*Africa Opportunity Fund(AOF) went ex-div Dec. 24 and the stock is down sharply. However there is no real volume in US trading, bid $1.06, ask $1.24. I want to buy more. AROFF.

*Merrill Lynch tipped Schlumberger Ltd (SLB), a Dutch incorporated wellhead services firm, as a way to play US drilling boosts. SLB rose.

*Chicago Bridge & Iron (CBI), also Dutch, reported winning a $55 mn contract from North West Redwater Partnership to upgrade 18 bitumen storage tanks for a new refinery in Alberta, Canada. This is one way around the problem of what to do with disgustingly dirty tar sands which the US doesn't want. 

*Smartconsensus tipped another fish farm but the wave also boosted Norwegian Marine Harvest (MNHVF) today. Norway is closed. That was American punters on smoked salmon.

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