As we now all know, Apple throttled older iPhones allegedly to stop batteries from dying, and just by chance also encouraging its i7 and earlier model customers to buy newer phones. As an owner of two i6+ models I am a member of the class suing AAPL.

Despite the Republican attempt to defund Obamacare by removing the obligation to buy health insurance if you want to risk paying out of pocket, in fact Americans are signing up. Drug and hospital shares should gain from news that in week 7 of the open enrollment for Obamacare in the Federally Facilitated Marketplace, covering 39 states, the level has already hit 11.8 million people.

This is ahead of the S&P target for the whole of 2018. Enrollment can rise further because plans have extended signup times because call centers crashed because of the heavy sales volume and because areas which had natural disasters like Texas, Florida, Georgia, and South Carolina also have extended sign-up periods.

Catalans voted for separatists but barely, which hurt the Spanish bolsa as it means that an early resolution is unlikely. The euro fell 0.5% to $1.1817 overnight.

Bitcoin fell below $12,504 yesterday and opened up only a bit at $13,659.85 Friday, in what I hope was an unrelated move.

Bloomberg headlined how the former Long Island Iced Tea Wednesday changed its name to Long Blockchain which boosted its share price 183% in yesterday's trading when 15 million shares changed hands. It has no non-tea assets or blockchain deals yet. It also cancelled a stock sale planned earlier. It is 13% controlled by Briton Eric J. Watson of Cullen Investments who owns businesses, he says, in various English-speaking counties, and which sold its Cullen Agricultural Holdings to the former tea company in 2015.

There will be no blog Monday. Instead I will work on the fixed-income part of my outlook for 2018, the equity bit of which came out yesterday. The main problem is that something like 85% of asset managers think bonds are overvalued, a level that has prevailed since October, well before the latest Fed interest rate hike. (Data from BofA-Merrill Lynch Global Fund Manager survey.)

One of the few bright bond markets, which had attracted some 43% of asset managers in November, was China. Its risks are now scaring them and as of Dec. 15, only 34% of them were buying Chinese debt. About 15% of respondents now expect a Chinese debt crisis to hit in 2018.

Chinese debt valuation would be hit if growth slows, particularly in the hot real estate market, and if inputs and raw materials go up in price because of anti-pollution measures. You have to decide if the Xi Jinping government controls Chinese economic levers or not, which is unpredictable. My challenge for the holiday weekend.

The last trading day before Christmas-to-New Year week, when markets tend to be quiet, was mainly about closing deals before 2018 and Catalonia. 

Industrials

Mexichem has raised $200 million for 12 months from BBVA Bancomer for the 80% purchase of Netafim of Israel, a maker of drip irrigation systems put on the market by the founding Kibbutzim Magal and Hatzerim and the Permira Fund group. Kibbutz Hatzerim will retain the remaining 20%. Netafim makes smart water-saving and fertilizer-daving systems to increase crop yields sold in over 30 countries. The partners will retain R&D in Israel.

MXCHF will also add about $300 million in its shares to the pot to close the deal announced back in August when the peso was much higher at $1.895 billion. The deal still must be approved by regulators in Brazil, a major Netafim market. When closed, the deal will boost its main agricultural plastic tubal sales by as much as a quarter in some markets.

Schlumberger Ltd will hold a conference call Jan. 19 on its Q4 and full year results, and the indications are that they will be good. SLB stock yesterday gained nearly 4% on about double normal volume on the NYSE. They are up 9.66% so far in Dec.and are 6.2% up against their 50-day moving average. SLB sells oil and gas discovery services and has recently taken to accepting a share in what its customers find rather than demanding payment up front. SLB is run from Paris and Houston by a Norwegian but is incorporated in Curacao in the Dutch Antilles. Last week two big drilling contracts in Norwegian waters were signed for over $250,000/day (not with SLB but with specialists in Arctic drilling to become active next summer.)

And BP plc is about to sign another. The shale impact on offshore drilling may be running down.

Demand for US liquified natural gas from Japan is expected to hit a record this year adding to pressures for completion of Jordan Cove by Pembina PMB.

Vale partner BHP is chipping in another $181 mn for the cleanup at Samarco where their tailings dam collapsed three years ago. Vale hit a new 24-wk high as a result.

Ecopetrol hit another 24 wk high too. EC is a Colombian oil co which gains from Venezuela's problems.

China Eastern Airline renewed its contract with Air France-KLM for another two years to 2019.

Drugs

*In a last minute shopping trip, Swiss Roche is paying $1.7 billion to buy Ignyta, a San Diego cancer diagnosis drug specialist working on mutations which are hard to find and treat. RHHBY will pay a premium over Thursday's closing price of about 75% after Reuters broke the story overnight. Ignyta went public only three years ago and an analyst covering Roche, Michael Nawarth of Zuercher Kantonal Bank told the wire service that Roche was good at bolt-on acquisitions and was not overpaying.

Shire Pharma, which moved its operating HQ to Ireland for tax reasons, is now consolidating its US offices to the Boston suburbs of Lexington and Cambridge. It will become the No. 2 pharma employer in Mass. This will give it political clout and save money.

Taxes and Currencies

Vodafone was not awarded the Austrian cable business of Liberty Global, LBTYA, and John Malone sold to a rival, Deutsche Telekom, for $2.2 billion right before beginning talks on a merger of LBTYA with VOD. Liberty's UPC Austria has about a half million subscribers whereas market leader Telekom Austria has 3x as many. I suspect VOD was cautious as it needs to keep its powder dry to build out high-speed broadband in the UK. The government supervisor, Ofcom, said BT is moving to slowly to speed up service in rural areas and is opening the upgrade to other telcos including VOD whose shares rose in London today.

Buy on rumor sell on news hit global and US shares pre-market on Friday, without it being clear whether the tax bill details or the fact that it is now old news led to the selloff—or if it would continue during the last market day before the holiday. EPFR, the US fund tracker, reports that global equity funds lost $14.5 billion of investments in the last 4 weeks.

The funds penalized invested in large global stocks doing a lot of business in the US, who are among the likely losers from the new laws which cut taxes for their American competitors—but not them. And there will be a negative impact from a ceiling on interest expense deductions for US subs of foreign companies.

The worst hit pre-market are global Canadian stocks hit also because of GDP data to be released later today. But experts expect a big move out of European stocks

Among the victims is Deutsche Telecom whose US T-Mobile arm will have problems continuing to operate solo under the new rules which penalize importers. The German company barely makes money and lives off the growth in its US market. While DTE stock has fallen the level is still way too high in part because the government owns 32% of the stock. Other losers include Fiat-Chrysler Auto, FCAU, and Invidior, INVVY, both sold well before the terms of the tax bite were known.

Finance

Spanish shares, including Banco Santander, cratered after the pro-independence Catalan vote tally came out although the banks with the most business in Catalonia fell even more sharply and the rest of the eurozone was not spared either as both the euro and banks fell.

However UK banks and stocks overall hit a new highs Thursday and Friday. Gainers include Standard Life Aberdeen, Virgin Money, BP, and best of all Renishaw (despite it being a supplier to Apple). Shire and GlaxoSmithKline gained, despite their heavy US exposure, probably because an exemption will be found or because of the strong push into Obamacare note above.

Greencore however is down after the UK food standards agency ordered that it recall chicken and bacon “caesar wraps” which contain metal fragments which can hurt consumers. BAE Systems is down because people are talking too much about Peace on Earth.

Germany's Allianz SE continues with its plan to buy credit insurer and bond firm Euler Hermes. It filed with the French market regulator (AMF) to pay euros 122/share ($145) for the 24.2% in the UK firm HQ'd just down the road from here at Canary Wharf held by retail shareholders. AZSEY bought up 11.3% of Euler Hermes last month, taking its stake to 75%. After the offer goes live early next year, at a 20.7% premium to what it paid institutions, individual shareholders who refuse to give up their Euler Hermex stock can be subject under French law to a squeeze out.

Pimco Dynamic Income Fund, PDI, published an updated prospectus with our SEC. This closed-end fund operates using some of the hedging tactics offered by Pimco, which is ultimately owned by Allianz. PDI is indirectly selling up to 9.5 million new shares thorough Jones Trading Institutional Services which probably will offer them for public sale next year. Jones paid $29.02/share and it is allowed to add 1% when the offering it underwrites is launched on the NYSE. This is a way for PDI to add more funds under management while avoiding the tendency of closed-end funds to drop to a considerable discount from net asset value once trading begins. PDI has prepared the market for this innovation by not publishing NAV data regularly, which is legal.

Bank of Nova Scotia continues to launch derivatives to hedge global stock indexes, the most recent for euro-denominated Stoxx Index stocks to offload risk. Given the impact of Catalan elections on the euro and shares in that currency, this is highly speculative. But BNS offers the reverse, a way to short the same global index, so I suppose it is covering both sides.