Now that they have swept to controlling both Houses of Congress, our modestly middle-of-the-road Republicans will have a chance to show what they can do. The key reason for the victory dance is that the GOP managed to eliminate Tea Party contenders from major races, mainly by use of vast sums of money.

I expect that moderate GOP immigration and energy policy can perhaps produce some good results for the country, if reasonable people will be able to work with those across the aisle. More renewable energy and fracking and less coal. A permit for Keystone XL with a safer route. Helping Dreamer kids who were raised in this country but who have progblems with the Migra because they entered the country as children.

I am not so sure about a desperately needed start on tax reform or retirement programs. This is too much same old, same old, too contentious. And the Republicans are hampered by movie stars making use of poor data. Paul Ryan, who wants to take over as Chairman of the House Ways & Means Committee, is a famous producer of slippery numbers.

Naturally I dread any move on social policies like abortion to homosexuality although in fact most politicians now know that they cannot win elections on banning either. So the plots to turn back the clock will probably die in committee.

I fear some useful government programs like the Ex-Im Bank may fall by the wayside if the GOP feels it needs to throw some red meat to its radical fringe but probably business will back its continuation.

One key plank in the Tea Party's misguided platform was attacks on the Federal Reserve for its alleged “money-printing”, expected to result in deficit-spending, inflation, and depreciation of the dollar. This drumbeat of criticism is economically unsound, and also contradicted by the facts on the ground. In fact the Federal deficit is shrinking fast.While the US trade deficit is rising because a strong dollar hurts exports, the same is not true of the budget gap, as Bloomberg reported:

“Robust economic growth has helped push the U.S. budget deficit down to the lowest level since 2008, marking the sharpest turnaround in the government’s fiscal position in at least 46 years.

“The shortfall of $483.4 bn in the 12 months ended Sept. 30 was 2.8 % of the nation’s gross domestic product of $17.2 trillion over the same period, according to data compiled by Bloomberg using Commerce Department figures. The figure peaked at 10.1% of GDP in December 2009. “

Another area of contention is foreign policy, notably the Obama administration handling of Syria, Ukraine and Russia, Iran, and Israel.

Today Gazprom, a friend of Putin, announced that it was offering Eurodollar bonds, denominated in the greenback but sold abroad. It is offerign up to 5% for 1-year money, but the amount it can raise is unclear. OGZPY has been frozen out of normal markets since the Ukraine invasions began, but it owes about $8 bn to Bank of America-Merrill Lynch from a pre-sanctions deal. Gazprom raised a mere 15 bn rubles, about $340 mn, with a local currency issue in Russia last week. It is hurting.

If you want to buy local currency debt from the BRIC countries and other emerging markets, you now can do so with an ETF, issued yesterday on Nasdaq to let US retail investors buy this paper. It is called First Trust Emerging Markets Currency Bond ETF. This is not a recommendation of course. And it will not be able to buy ruble bonds as a US entity. Another new ETF from the same shop is called First Trust International IPO Fund. I am not sure if that would include international companies which raise money in the US, as Alibabadid.

Hail Caesar!

*Hail Caesar! Hail Frida!. Caesarstone Sdot Yam, the maker of kitchen countertops, reported Q3 revenues up 30.7% to $123.3 mn. Net profits came in at $26.5 mn y/oy and EPS at 76 cents, up 63% over prior year Q3! It also declared a specail dividend of 57 cents/sh to holders as of Nov. 26.

The sales growth was higher than average in the US and Canada, which easily replaced the Russian market. Gross Q3 margins were down marginally at 43.7% vs 44.5% in prior year, in part because of more counters sold to IKEA, were lower margins apply plus some foreign exchange changes—but only minor jumpst in raw material prices. Operating expenses were $22.7 mn, or 18.4% of revenue thanks ot economies of scale vs Q3 2013 levels of $21.1 mn, or 22.4% of revenue. Operating income in the third quarter grew by 49.3% to $31.2 mn, a margin of 25.3%, compared to $20.9 million, a margin of 22.2%, in Q3 2013.

Adjusted EBITDA, which excludes share-based compensation expense, the excess cost of acquired inventory and other non-recurring costs, increased by 42.4% to $35.9 mn in Q3, a margin of 29.1% vs. EBITDA of $25.2 mn, at 26.8% in 2013.

CSTE is on schedule with its capacity expansion project in Richmond Hill, Georgia, its 6^th site. This Israeli kibbutz company is not in the Israeli index as it is not listed in Tel Aviv.

*We bought Allianz Versicherung too soon. The German insurer suffered a further d $27.5 bn in withdrawals from its flagship Pimco Total Return Fund in Oct., further outflows after Bill Gross' departure from Pimco, a sub of AZSEF. Oct. outflows were above the $23.5 bn reported in Sept., leaving the Total Return Fund with only $170.9 bn in managed assets, down from a peak of $293 bn in

2013. The good news is that fund managers who were forced out or resigned in the final year of Gross's reign are returning to Pimco now.

*Aie Brasil. Cosan expects the local antitrust office to come to a final conclusion about its plan to merge its logistics arm with America Latina Logistica in 90 days, an alternative to taking 240 to 365 days to decide.

Mr Market

*Mr Market didn't take long to realize that Schlumberger is NOT an oil company, so SLB stock is up.

*It also realized the appeal of Ecopetrol which has recovered most of its loss yesterday. EC.

Canada Outlook

*Here is a Scotiabank Private Analysts' Group take on Agrium:

“A 4% hike to the dividend to $3.12/share may come across as a disappointment, especially after ValueAct was throwing around 'out‐year' numbers like $5-6 last week. We were looking for an 8-10% raise this week. We see three reasons why” [we were wrong]:

“1) [To] leave room for future increases. Stable dividend growth is how to decouple the retail business from its wholesale commodity peers.

“2) [In the past] Agrium increased its dividend too quickly. AGU raised its divy by 27x in

2+ years, while CF, POT, and MOS raised their dividends by 15x, 10.5x, and 5x, respectively ‐ not the best dividend measure. While initial raises were likely due to AGU rapidly catching up to peers, the final round (+50% to $3 from $2) was probably due to activist pressure.

“3) The dividend will cost AGU ~$900M over 2014-5, while we estimate 2014-5 [free cash flow] at less than half this amount.”

Its conclusions:

“Q3 results were better than expected, but Q4 guidance was below consensus, underscoting some near-term challenges across the ag sector (due to lower commodity prices). AGU will likely trade lower today on Q4 guidance and lower than expected dividend increase.

“We suggest trimming holdings in the C$105-C$110 range.” SELL HALF.

*Scotiabank also wrote about Veresen: Jordan Cove is progressing on plan. [The US] FERC schedule sets Feb. 27 as the date for a final Entry In Service.” This will allow the liquefaction plant to go operational next summer. FCGYF also expects “binding agreements for 100% of capacity” in Q1 2015.

Drug Applications

*Novartis is pitching its new drug for multiple myeloma to our Food & Drug Administration's Oncology Advisory Committee today despite possible safety risks. Thecombination of NVS's panobinostat, Velcade from Takeda, and the steroid dexamethasone prolonged progression-free survival by 3.9 months vs either alone. This gave patients nearly 3 years longer total survival (the secondardy end point) before the nasty blood cancer killed them.

However, 7% of patients in the panobinostat arm died from non-cancer complications, double those in the other arm, and reported symptoms included myelosuppression, hemorrhage, infection, and gastrointestinal and cardiac toxicity. The issue is if the benefits are worth the risks of the drug which NVS wants to sell as Farydak. It used to be called LBH589.

But some examination may undermine the claim that patients really gained a year, because an independent review committee charted a median progression-free survival may have been only 2.2 months vs placebo.

*GlaxoSmithKline filed US and EU regulatory new drug applications for mepulizumab as a maintenance treatment for eosinophilic asthma and will file in other countries as well this year and next.

*Alkermes reported to the US SEC that its CEO, James Frates, his family, and the CFO have acquired lots more ALKS shares. ALKS is Irish.

More Ireland

*New Ireland Fund reported on its portfolio yesterday. Its top 5 holdings are Ryannairat 19.62% which is hardly diversification, followed by Kerry Group (10.7%); Aryzta Hlgs(of Switzerland, 9.8%); CRH (8.05%, up from last month); and Bank of Ireland (4.55%).