Fiat to take full control of Chrysler in $4.35B deal. Fiat (FIATY) has agreed to pay $4.35B to acquire the 41.5% stake in Chrysler owned by the United Auto Workers Retiree Medical Benefits Trust. The deal ends a long-running dispute over the valuation of the U.S. carmaker, which is just over $10B under the agreement. It also provides Fiat with full control and helps pave the way for the consolidation of the companies. In addition, the transaction means that Chrysler's prospective IPO will probably be called off. Fiat's shares had soared 12.45% in Milan at the time of writing.
China's factory activity slows. Two surveys have indicated that China's manufacturing sector slowed in December, with the official PMI falling to 51 from 51.4 in November and the HSBC print slipping to 50.5 from 50.8. New export orders disappointed in both readings, while employment contracted further in the official index. "Domestic and overseas demand was weaker than expected," says economist Li Heng. "The economy is under some downward pressures but the slowdown remains modest." Notwithstanding, the data has put a bit of a damper on the mood in the markets.
Top Stock News
Teva to appoint turn-around expert as CEO - report. Teva Pharmaceutical Industries (NASDAQ:TEVA) will reportedly appoint former director Erez Vigodman as its CEO this month to replace Jeremy Levin, who resigned in October. Vigodman is credited with turning around MA Industries when he was CEO of the generic crop protection company. Citi analyst Liav Abraham believes that even though Vigodman lacks pharmaceutical experience, the latter's track record would make him a good choice. This is relevant for Teva, due to the upcoming Copaxone patent cliff and the company's $2B restructuring.
U.S. M&As top $1T in 2013. U.S. companies took part in mergers and acquisitions that surpassed $1T in total in 2013, the most since the financial crisis. The amount rose 11% even as the global figure was flat. M&A bankers and lawyers are optimistic that the market will continue to hum along nicely. "The pressure is building for companies to justify their trading multiples," says Chris Ventresca of JPMorgan. Possible deals that may come to fruition in 2014 include one involving Time Warner Cable (TWC).
IPO market nears pre-crisis levels. The number of IPOs (NYSEARCA:IPO) jumped 59% in 2013 to 230 and the amount raised climbed 31% to $62B as companies took advantage of the Fed-fueled banner year for stocks to take the IPO market close to levels seen in 2007. Bankers and investors expect the fun to continue in 2014, with the likes of Alibaba among the possible candidates for a public listing. However, there are concerns that the market is getting too frothy.
Countries argue over Kazakh tycoon accused of massive theft. Billions of missing dollars, a fugitive tycoon, the surveillance of a Ukrainian lawyer from London to France, and a dictatorial central Asian President, the WSJ tells the story of Mukhtar Ablyazov, who's accused of embezzling $6B. In a narrative that reads like a pulp-fiction thriller, Ablyazov is accused of stealing the money from Kazakhstan's BTA Bank, where he was the chairman until it was suddenly nationalized in 2009. Ablyazov's now in prison in France, with authorities in Ukraine, Russia and the U.K., as well as in Kazakhstan, wanting him for various reasons.
Top Economic & Other News
Eurozone manufacturing sector continues to recover smartly. Eurozone manufacturing PMI increased to a 31-month high of 52.7 in December from 51.6 in November. Rising output and fuller order books encouraged manufacturers to hold off from further job cuts, while new export orders again rose at a solid pace. Germany, Italy and Spain are seeing the strongest output growth since early 2011, although France "remains a concern" and is looking uncompetitive.
China to allow local authorities to roll over debt. China's National Development & Reform Commission (NDRC) has for the first time given local governments public permission to issue bonds in order to refinance debt and avert defaults. The move, which reflects what was anyway going on, highlights the government's balancing act of trying to manage ballooning debt without causing a sharp deceleration in growth. It also comes after an audit showed that local-government debt has surged 70% to almost $3T in less than three years.
Over 2.1M signed up as Obamacare plans take effect. More than 2.1M people have signed up for Obamacare-mandated health insurance, which went into effect yesterday. That's an addition of 1.6M consumers in December, but somewhat below the 3.3M that was initially projected. Administration officials don't know how many people have paid, while insurers haven't received all the information they need about those who have bought plans. As a result, much confusion is expected when patients turn up for appointments.
Pump prices hit lowest average level since 2010. The price of regular gasoline dropped to an average of $3.49 a gallon in 2013 from $3.60 in 2012, the AAA says, making last year the cheapest since 2010. The association reckons pump prices will fall another five cents in 2014 as well. The decline comes amid a sharp rise in production, with output increasing 4.3% to 9.72M barrels a day in the week ended December 20. The cheapest gasoline in 2013 was in South Carolina, where the average cost was $3.24, while the most expensive was in California, where the price was $3.89.
Those who won big in 2013. "A trader who made more than $100M from a $10M bet against gold. A hedge fund that gained 42% after a bullish wager on stocks. A firm that saw returns of 48% thanks in part to soaring Japanese stocks." The WSJ profiles a few of those who made bucket loads of cash in the markets last year, often by "going against the prevailing wisdom."
Top Ideas Movers and Great Calls
1) On December 18, Saj Karsan highlighted Canadian telecom provider Tellza (PHOEF) as a source of undiscovered growth at a very cheap price. The stock is +38.5% since his call. Read article »
2) The Critical Investor called out miner Tasman Metals (NYSEMKT:TAS) on October 15 as the best way to play the rare earths space. Shares are +48.5% to date. Read article »
Top Ideas To Watch
1) Intangible Valuation - who has already seen two Top Ideas triple - turns his gaze to water and coffee delivery specialist Crystal Rock Holdings (NYSEMKT:CRVP). He sees 60% upside once the market realizes that the company's true profitability has been masked by temporary factors. Read article »
2) A byzantine ownership structure has caused Crédit Agricole (OTCPK:CRARY) to trade at a discount to peers despite growing profits and lower sovereign debt exposure, writes Helix Investment Research. Read article »
Top Ideas are the best long and short ideas on Seeking Alpha. SA PRO subscribers receive early access to these Top Ideas, which often move markets. For more information about SA PRO and becoming a subscriber, click here.
In Asia, Japan closed. Hong Kong +0.1% to 23340. China -0.3% to 2109. India -1.2% to 20888.
In Europe, at midday, London -0.5%. Paris -1.1%. Frankfurt -0.6%.
Futures at 6:20: Dow +0.1%. S&P -0.2%. Nasdaq -0.3%. Crude +0.1% to $98.50. Gold +1.6% to $1221.20.
Ten-year Treasury Yield flat at 3.03%.
Today's economic calendar:
8:30 Initial Jobless Claims
9:00 PMI Manufacturing Index
9:45 Bloomberg Consumer Comfort Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
Notable earnings after today's close: LNDC
See full real-time earnings coverage »
Wall Street Breakfast is sent out by email for free -- Get it now »