12:05, 31 Dec 2014 (Wed) 

MOSCOW--Russian inflation accelerated as the ruble plummeted in December to a rate of 11.4% for the year, the highest level since the 2008 financial crisis. Many retailers started raising prices in December as the ruble's losses against the dollar soared over 40% for the year amid Western sanctions on Russia and a plunging price for oil, the country's main export. Consumer prices rose 2.6% in December compared with the previous month, according to preliminary data from the State Statistics Committee published Wednesday. In November, annual inflation was 9.1% Food prices rose 15.4% on the year, while non-food inflation stood at 8.1%, the data showed. Last year, consumer prices rose 6.5%. Russia's economy is facing stagflation, a combination of low growth and stubbornly high inflation, and is likely to fall into recession next year after the central bank jacked up lending rates to support the beleaguered ruble. 

Write to James Marson at james.marson@wsj.com

Repost by C. Hagan

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REPOST

(Inside Oil - Asia edition will not be published on Thursday, January 1, 2015 as markets are 
closed in observance of New Year Holiday. Wishing everyone a Happy New Year.) 


TOP NEWS 

U.S. opens door to oil exports after year of pressure 

The Obama administration on Tuesday bowed to months of growing pressure over a 40-year-old ban 
on exports of most domestic crude, taking two steps expected to unleash a wave of ultra-light 
shale oil onto global markets. 

Obama move on U.S. oil exports paves way for Canadian crude, too 

As the Obama administration issued landmark guidelines expected to open the door for selling 
more domestic shale oil abroad, it also likely smoothed the way for more Canadian crude to be 
shipped through U.S. ports. 

Fire at Libyan oil port destroys up to 1.8 mln barrels of crude 

A fire raging for almost a week at Libyas biggest oil port of Es Sider has destroyed up to 1.8 
million barrels of crude and damaged seven storage tanks, causing total damage of $213 million, 
a top oil official said on Tuesday. 

OPEC oil out out hits six month low in December on Libya 

OPECs oil supply fell by 270,000 barrels per day (bpd) in December to a six-month low as 
fighting cut Libyan output, offsetting record Iraqi southern exports and stable Saudi Arabian 
production, a Reuters survey found. 

Indonesias new energy governance team recommends Petral shake-up 

Petral, the trading arm of Indonesias state energy company Pertamina , should undergo a 
management shake-up, forensic audit and be stripped of its right to handle oil imports, the 
countrys new oil and gas governance team recommended on Tuesday. 

POLL-U.S. crude stocks likely slipped last week, products up 

U.S. commercial crude oil inventories were forecast to have slipped marginally in the week ended 
Dec. 26, while products stocks rose, an expanded Reuters survey showed on Tuesday. 

Petrovietnam to trim crude oil, gas output in 2015 

State oil and gas group Petrovietnam said it plans to cut Vietnams crude oil output next year 
to 16.8 million tonnes (337,000 barrels per day), down 3.3 percent from 2014, citing oil price 
volatility. 

Court orders Argentinas YPF to disclose contract with Chevron 

An Argentine judge on Tuesday ordered the state-controlled energy firm YPF to fully disclose 
details of its contract with Chevron Corp sought by an opposition lawmaker amid allegations of 
secret clauses in the agreement. 

MARKET NEWS 

Brent and WTI see small gains as end of year approaches 

Crude futures closed up slightly Tuesday, getting some relief from a weak dollar but not making 
significant strides as traders prepared for the end of the year. 

FOREX-Dollar index on track for best annual gain in 9 years 

The dollar was on track to end 2014 with a gain of 12 percent against a basket of major 
currencies, and anticipated U.S. interest rake hikes may strengthen its appeal in the new year. 

GLOBAL MARKETS-China stocks are top performers in 2014, oil depressed 

Asian markets were ending 2014 on a cautionary note as worries about Greeces future in the euro 
zone served as an excuse to take profits on crowded trades, though Chinese stocks seemed 
destined for their best year in five. 

(Reporting By Vishaka George)

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Russia's Putin scraps New Year's holidays for ministers

AP - Thu Dec 25, 7:15AM CST

MOSCOW (AP) — Russian President Vladimir Putin on Thursday scrapped New Year's holidays for government ministers because of the unfolding economic crisis.

Russian company employees throughout the country are entitled to holiday from Jan. 1 to Jan. 12 when Russians celebrate the New Year, the main holiday in Russia, as well as Orthodox Christmas on Jan. 7.

Putin told a televised government session on Thursday that Cabinet ministers should not take this time off.

"For the government, for your agencies we cannot afford this long holiday, at least this year - you know what I mean," he said.

Prime Minister Dmitry Medvedev told Cabinet ministers on Thursday he expects them to keep the situation in check even during the holiday lull "from the first days of the year."

Russia's economy, battered by low oil prices and Western sanctions, is set to enter recession next year for the first time in six years, while the ruble is now worth less than half of its value.

The ruble staged a modest rally last week and was trading 2 percent higher at 52 rubles per dollar Thursday, up from 80 rubles earlier this month.

The Russian Central Bank announced on Thursday that the country's currency reserve has dropped below $400 billion for the first time since August 2009, as the government has been selling the currency on the market to support the ruble.

Stabilizing the ruble, which is one of the world's worst-performing currencies this year following the slide in oil prices and the sanctions imposed on Russia, is a priority for the country's monetary authorities. The Central Bank in past weeks raised its key interest rate to 17 percent and said it will offer dollar and euro loans to banks so they can help major exporters that need foreign currencies to finance operations.

Many Russian companies have been locked out of Western capital markets following the sanctions imposed on the country for its involvement in Ukraine.

Superfund Equities Report

Fiat Chrysler is having problems. Earlier this year we stood by them and the vision of the dynasty. We traded in and out and had an established level of confidence when the Ferrari IPO was announced. Then came the airbags. Let us wait to see about Ferrari.

North Korea denies hacking Sony, U.S. stands by its assertion...LINK

Upgrades

BHP Billiton plc (LON:BLT) had its price target lowered by analysts at Deutsche Bank from GBX 2,400 ($37.72) to GBX 2,100 ($33.00) on Tuesday. They now have a "buy" rating on the stock.

The Dow Chemical Company (NYSE:DOW) is now covered by analysts at Nomura on Tuesday. They set a "buy" rating and a $57.00 price target on the stock. 24.3% upside from the previous close of $45.84.

Vale SA (ADR) (NASDAQ:VALE) had its price target lowered by analysts at Credit Suisse from $10.50 to $7.50 on Monday. They now have an "underperform" rating on the stock. 7.9% downside from the previous close of $8.14.

Onward Profits!


Chad


Chad Hagan

CEO, Hagan Capital

Executive Editor, Superfund Equities


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ODP >> Takeover Target - December 11, 2014 - Updated 12/17/2014 by C. Hagan




Business Summary: Office Depot, Inc. (ODP, $7.54/shr - NOW AT $7.99) supplies office products and services to consumers and businesses through approximately 2,000 stores and its primary websitewww.officedepot.com in North America (approximately 80% of sales) and select international countries (20% of sales). ODP is entering the second year of a three-year integration plan following its merger with Office Max in late 2013 and the combined company generates annual revenue of approximately $16 billion.




Activist Investor: Activist investor Starboard Value LP on December 10, 2014 filed a 13 D/A reporting an increased 9.9% stake in ODP after filing an initial 13D back in September 2012. Starboard has been an active ODP shareholder over the last two years and won three board seats in an August 2013 settlement with the company. Also on December 10, 2014 Starboard filed a 13D reporting a new 5.1% stake in larger competitor Staples, Inc. (SPLS, $16.10/shr). Both ODP and SPLS stocks popped after yesterday's joint filings as Starboard is reportedly pushing for a merger of the two competitors.




SPLS / ODP Merger Mania: SPLS and ODP actually agreed to merge in 1996, but the transaction was subsequently blocked by the FTC. Credit Suisse analyst Gary Balter recently proposed that the two companies should now give it another go (see 9/2/14 research report) and Starboard seems to agree. The competitive landscape has changed dramatically and based on language in the FTC's unconditional approval of the ODP/OMX 2013 merger (seehttp://www.ftc.gov/sites/default/files/documents/closing_letters/office-depot-inc./officemax-inc./131101officedepotofficemaxstatement.pdf), Balter thinks a SPLS/ODP combination would likely be approved. For its merger with OMX, ODP is targeting $750 million of synergies after three years and recently posted better than expected 3Q14 results and provided better than expected 2015 guidance, indicating that the synergies are real and dropping to the bottom line. Balter estimates that a grander SPLS/ODP merger could yield $1.4 billion of annual synergies and double the current combined operating profit of the two companies, suggesting huge value creation for both ODP as target and SPLS as acquirer.




Thesis Summary: ODP at 5.5x 2015 EV/EBITDA and 0.28x EV/Sales trades at a big discount to SPLS at 7.5x EV/EBITDA and 0.48x EV/Sales despite ODP being the rumored takeover target and despite ODP having a better earnings trajectory than SPLS as significant ODP/OMX merger synergies are expected to benefit the bottom line for the next few years. For example, ODP EBITDA is expected to grow from approximately $565 million in 2014 to $775 million in 2015 with further growth in 2016 as synergies ramp and annualize; while consensus estimates for SPLS suggest flattish EBITDA of approximately $1.4 billion from 2014 to 2016. While ODP has upside to $10.20/shr (plus 35%) simply based on a 7.5x SPLS EV/EBITDA multiple, the real upside will come if SPLS buys or merges with ODP in a transaction that seems to make perfect sense if it were to pass antitrust review. As detailed below, ODP may have huge upside to $20/shr (plus 165%) in a merger scenario and arguably modest near-term downside due to its big discount to SPLS, improving operating results, synergy tailwind, net cash balance sheet, activist involvement and general SPLS/ODP merger buzz. [Note: ODP's indicated EV multiples include $500mm of estimated liabilities for remaining integration costs, legal accruals, and timber sale deferred taxes.]




Upside Takeover Scenario: Balter suggests that SPLS move sooner rather than later and hypothesizes that SPLS pay an 80% premium in an all-cash, debt-financed purchase of ODP (note: ODP was trading at $5.12/shr when the research was published). I would advise, however, that ODP demand credit for at least 50% of the estimated synergies from a transaction, which would still be hugely accretive to SPLS. I frame an upside scenario for ODP as follows: 1) ODP has guided to approximately $475 million of operating profit in 2015, or roughly $775 million EBITDA; 2) Add $700 million for 50% of estimated SPLS/ODP merger synergies, gets you to $1.475 billion EBITDA; 3) Apply SPLS current EV/EBITDA multiple of 7.5x (so not even figuring a premium multiple) derives $11 billion of enterprise value attributable to ODP; 4) Subtract $200 million of ODP net debt/obligations estimated at year-end 2014 (roughly $1.0b cash, $700mm debt, and $500mm estimated other liabilities) derives $10.8 billion of equity value, or $20/shr (plus 165%) for ODP based on 545 million diluted shares. Even with the huge premium, SPLS would be purchasing ODP at only 5.1x EBITDA pro forma for 100% of Balter's estimated synergies and a still reasonable 7.5x EBITDA pro forma for 50% of estimated synergies. The ODP takeover would be hugely accretive to SPLS based on the modest purchase multiple and cheap debt financing, even if SPLS uses some equity consideration.




Confucius Says: When the rumored target of an activist-inspired-logical-value-creating-merger in a cheap-money-fueled-hot-M&A-market is trading at a big discount to the rumored acquirer despite having superior earnings trajectory, the target is a buy... even if it sells office supplies.Thank you Andrew Shirley, 9665 Wilshire Boulevard, Beverly Hills, CA, 90212

Superfund Equities Report













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Greetings December!




Today in Atlanta it was unseasonably warm. I like weather benchmarks, and today we blew one out. That will change with night fall. Come on strong winter!




What is up with commodities? Are traders in Zurich shutting shop? Perhaps switching to Saudi only oil and for that fact, eastern demand for precious metals?




The US oil industry is maturing, not ending...LINK




Even lower crude prices possible...




However, as of 9pm last night WTI crude oil hit new multi-year lows in early overseas action - to $64.60 per barrel.




NOW, Gold is at $1208 per ounce and silver is at $16.64. Also, Swiss voters overwhelmingly rejected a proposal which would have forced the central bank to hold 16% more gold in holdings - as in pure, non-transferable holdings.







Stock Upgrades/ Downgrades...




Alcoa Inc (NYSE:AA) was upgraded by analysts at Citigroup Inc. from a "neutral" rating to a "buy" rating. They now have a $21.00 price target on the stock, up previously from $12.50. 21.5% upside from the previous close of $17.29.













​American Airlines Group Inc (NASDAQ:AAL) was upgraded by analysts at Bank of America from a "neutral" rating to a "buy" rating. They now have a $55.00 price target on the stock, up previously from $46.00. 13.3% upside from the previous close of $48.53.













Thomson Reuters Co. (NYSE:TRI) was upgraded by analysts at Nomura from a "reduce" rating to a "neutral" rating. Previous closing price of $39.60.













La Quinta Holdings Inc (NYSE:LQ) was upgraded by analysts at JPMorgan Chase & Co. from a "neutral" rating to an "overweight" rating. They now have a $26.00 price target on the stock, up previously from $22.00. 18.1% upside from the previous close of $22.02.













Energy XXI (Bermuda) Limited (NASDAQ:EXXI) was downgraded by analysts at Iberia Capital from an "outperform" rating to a "sector perform" rating on Friday. Previous closing price of $4.01. Today EXXI closed at $3.42. We recommend shorting the stink out of it.













Del Frisco's Restaurant Group Inc (NASDAQ:DFRG) was upgraded by analysts at Raymond James from a "market perform" rating to an "outperform" rating. Previous closing price of $22.22.













General Electric Company (NYSE:GE) is now covered by analysts at RBC Capital on Monday. They set an "outperform" rating and a $30.00 price target on the stock. Today closed at $26.02.













Deere & Company (NYSE:DE) was upgraded by analysts at Robert W. Baird from a "neutral" rating to an "outperform" rating. They now have a $105.00 price target on the stock, up previously from $85.00. 21.2% upside from the previous close of $86.62.













Venture Capital + Valuations...













Tech valuations are getting hot - so they say - a bubble? LINK













GoPro is developing its own range of drones. Make your own 'going vertical' joke - LINK













TO GREAT PROFITS! - CH








































Chad Hagan













CEO, Hagan Capital