Turkish PM replaces ten ministers as corruption crisis deepens. Turkish Prime Minister Recep Tayyip Erdogan has replaced ten ministers following the resignation of three cabinet members yesterday amid a probe into bribery, fraud and gold smuggling. The new ministers include one for the economy portfolio after the previous incumbent quit along with the environment minister, who called on Erdogan to resign as well. The scandal has badly hit Turkish stocks (TUR) and the ISE 100 index was -1.1% at the time of writing after plummeting 4.2% yesterday.
China sees growth slowing to 7.6% this year. China reportedly estimates that growth slowed for the third successive year in 2013, dropping to 7.6% from 7.7% in 2012 but coming in above the government's goal of 7.5%. Economists expect that China will expand 7.6% this year and 7.4% in 2014. The government is set to keep its growth target at 7.5% for next year, the same as that for 2013.
Plaintiffs want over $1B in P-E collusion case. Private-equity firms could reportedly have to pay over $1B to settle a lawsuit that they agreed to keep the prices of acquisitions low by not interfering with each others' deals from 2004-2008. The P-E firms have tried to get the case dismissed ten times, with plaintiffs now saying that "the time has passed" that they would have settled for $1B. The P-E firms involved include KKR (KKR), Blackstone (BX), Carlyle (CG), and Goldman Sachs Capital Partners (GS).
Top Stock News
Nikkei continues march higher. Japan's Nikkei 225 has climbed 1% to 16,174 today after finishing above 16,000 yesterday for the first time since December 2007. The yen has weakened and the USD-JPY was +0.4% at ¥104.79 at the time of writing after earlier hitting ¥104.84, the weakest yen level since October 2008. A major factor boosting stocks is the start of tax-free investment accounts, which has sparked buying from retail investors.
BP suffers setback in Gulf oil spill case. New Orleans District Judge Carl Barbier has rejected a request from BP (BP) that companies seeking compensation for the 2010 Gulf oil spill provide proof that the disaster caused them economic losses. An appeals court had told Barbier to reassess the terms of a settlement between BP and the victims of the spill after the oil producer argued that some claimants were unjustifiably receiving payouts, which it says has cost it hundreds of millions of dollars.
Target attackers stole encrypted PINs - report. The hackers who carried out the cyber-attack on Target (TGT) during the height of the Christmas shopping period reportedly took encrypted personal identification numbers (PINs). A leading bank is concerned that the thieves, who accessed the information of up to 40M payment cards, would be able to steal money from consumer accounts. However, Target has played those fears down. "We...have no reason to believe that PIN data was compromised," a spokeswoman said.
Late spike in online sales leaves retailers, UPS floundering. A last-minute wave of online shopping and bad weather left major retailers such as Amazon (AMZN), Kohl's (KSS) and Wal-Mart (WMT) unable to fulfill guarantees to deliver packages in time for Christmas. UPS (UPS) was particularly caught out. "The volume of air packages in the UPS system did exceed capacity as demand was much greater than our forecast," a UPS spokeswoman said. FedEx (FDX) was also affected, although the company said it didn't suffer significant delays.
Obamacare deadlines continue to shift. Federal and state governments are continuing to let people sign up for health coverage that takes effect on January 1 despite the latest national deadline passing on Tuesday. Massachusetts, Minnesota and Rhode Island are even allowing residents to sign up as late as New Year's Eve. While the constant shifting of deadlines is in response to technical problems and a late surge of interest, it's not going down well with health insurers.
Top Economic & Other News
BOJ needs to be wary of running out of JGBs to buy. The Bank of Japan could face a problem if it wants to expand its already massive monetary stimulus: a shortage of new bonds to buy. Even at the current rate of purchases, the policy could hit trouble after over two years. As a result, says former BOJ board member Atushi Mizuno, the bank may hold off from loosening policy further until late next year. The BOJ could also stop buying Japanese government bonds every month and instead only acquire the debt when long-term rates rise above a certain level.
Muni bond market set for worst year in almost two decades. Municipal debt is down 2.58% so far this year, putting the asset class on course for its worst annual performance since 1994. In contrast, muni debt provided a return of 6.78% last year. Detroit's fall into bankruptcy protection, as well as problems in Chicago, Illinois and Puerto Rico, have had a major effect in 2013. However, municipal debt tied to real-estate development, which is known as "dirt bonds" and is fairly risky, has risen 1.1% amid the recovery in the housing sector.
Regional African leaders in South Sudan peace attempt. With thousands feared dead, Kenya's and Ethiopia's leaders are in South Sudan for talks with the country's president in an attempt to bring an end to two weeks of fighting between government and rebel forces. The latter control the town of Bentiu in the oil-rich Unity state, while battles have been reported in Malakal in the Upper Nile state, another key oil region. South Sudan exports 220,000 bpd of crude, although the violence has led to a sharp drop in output.
Alpha-Rich Stock Movers and Great Calls
1) On December 3, Alpha Bet argued that the market was not yet pricing in the potential bottom-line impact of new business expansions and a continued housing recovery at Deltic Timber (DEL). The stock is +11.6% since. Read article »
2) In September, Kingsley Park Capital and The Happy Investor laid out bull cases for storage maker Xyratex (XRTX), respectively citing its deep value and likely diminishing R&D expenses. Following news of a buyout by Seagate (STX) on Monday, shares are +29.7% since the initial call. Read first article ». Read second article »
Alpha-Rich Stocks To Watch
1) Cabot Oil & Gas (COG) trades at rather high earnings multiples, but they are more than deserved given its impressive free cash flow and growth, which should create 50% upside, says energy expert Richard Zeits. Read article »
2) Biopharma portfolio manager Buddy Lyons, CFA says a ramp-up from an already impressive pipeline will drive BioMarin (BMRN) even higher. Read article »
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In Asia, Japan +1% to 16174. Hong Kong closed. China -1.6% to 2073. India +0.2% to 21075.
In Europe: London, Paris, Frankfurt closed.
Futures at 6:20: Dow +0.8%. S&P +0.6%. Nasdaq +0.4%. Crude flat at $99.23. Gold +0.25% to $1206.49.
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