Wall Street is expected to be in the green for the hour before market this Monday, with the S&P 500 gaining 0.3%, the Dow Jones 0.2% and the Nasdaq 0.1%. The indices mainly benefit from hopes of monetary easing and a series of financial operations. On the Nymex, a barrel of WTI crude rose 2.2% to $73.4. An ounce of gold gains 0.2% to $2,039. The dollar index stabilizes against a basket of currencies. On the bond markets, the yield on the 2-year T-Bond is 4.42%, compared to 3.91% on the 10-year bond and 4.02% on the 30-year bond.
On the economic front, the National Association of Home Builders’ US real estate market index for the month of December will be known at 4 p.m. (consensus 36) today.
Housing starts and building permits for the month of November will be announced tomorrow Tuesday, while the current account balance, the Conference Board consumer confidence index, resales of existing homes and the weekly inventory report domestic tankers will be revealed on Wednesday. Final third-quarter GDP figures in the United States will be released on Thursday, including weekly jobless claims, the Philadelphia Fed manufacturing index, the leading indicators index and the Kansas City Fed manufacturing index. . Finally, durable goods orders, household income and spending, new home sales and the University of Michigan Consumer Sentiment Index will be released Friday.
Loretta Mester, head of the Cleveland Fed, tried to calm the heat of the financial markets a little. The next step, she said, would be how long monetary policy should remain restrictive, not when rates will fall. Mester judges that the markets went a little too fast in speculating on the rate cut. The leader, also a voting member of the FOMC Monetary Committee, therefore suggested, cited by the Financial Times, that a rate cut was not imminent. These comments are in line with those of John Williams, head of the New York Fed, and Raphael Bostic of the Atlanta Fed, who were also cautious on Friday.
Mester therefore told the FT that “the next phase is not about when to cut rates, although that is where the markets are. It is about how long monetary policy should remain restrictive in order to ensure that inflation returns quickly and sustainably to 2%. She judges that the markets have gotten too far ahead by banking on a rapid normalization of rates.
It must be said, however, that the last monetary meeting of the Fed was an opportunity for Jerome Powell, its president, to adopt a much more flexible tone by suggesting that the peak in rates had been reached. The Fed’s forecasts also highlighted the anticipation of three rate cuts next year. Wall Street now expects the American central bank to start lowering rates in March.
The current level of the fed funds rate is at a 22-year high, between 5.25 and 5.5%. According to the CME Group’s FedWatch tool, the probability of a quarter-point rate cut from the January 30-31 monetary meeting is around 10%. The probability of a relaxation on March 20 reaches more than 73%. According to the same tool, rates could be in a range of 3.75-4% at the end of next year (probability of 38%). Projections released last week by the Fed showed that a majority of policymakers favored cutting rates by 0.75 percentage points in 2024 and another percentage point in 2025. Powell also said expressed some confidence in achieving the inflation target without having to go through a painful economic landing…
In corporate news, Heico releases its quarterly results after market this evening on Wall Street, while FedEx, Accenture, SatixFy and FactSet announce tomorrow Tuesday. Micron, General Mills, Toro and BlackBerry release Wednesday. Nike, Cintas, Paychex, Carnival and CarMax are finally expected on Thursday.
Values
US Steel soars by 28% to $50 before market on Wall Street. The Japanese giant Nippon Steel has just unveiled an offer for the American steelmaker worth $14.9 billion, including debt. This announcement comes a few months after the American went on sale. Nippon’s offer is priced at $55 per stock, representing a premium of approximately 40% to Friday’s close and 142% to pre-announcement of a strategic review process on Friday. August 11. Nippon Steel, the world’s fourth largest player in the steel industry, is therefore betting big on the United States, in order to compensate for the drop in demand in Japan. The Japanese have obtained financial commitments for the agreement and thus intend to reach 100 million tonnes of global crude steel capacity.
US Steel previously rejected a $7.3 billion offer from Cleveland-Cliffs. Reuters reported in August that ArcelorMittal was also considering an offer as part of the American’s sale process. US Steel, based in Pittsburgh, produces steel for the automotive industry and renewable energies. The companies agreed that US Steel would retain its name and headquarters.
IBM, the American technology services colossus, intends to buy the enterprise integration platforms of Software AG for 2.13 billion euros, a little more than 2.3 billion dollars, thus strengthening its artificial intelligence offerings and hybrid cloud. “Big Blue” therefore offers the StreamSets and webMethods platforms from Software AG as part of a cash transaction. These two units formed the ‘Super Ipaas’ business of Software AG. These platforms include application integration, application programming interface management and data integration. Silver Lake, which owns more than 93% of the shares of German software publisher Software AG, simultaneously announced its delisting offer at 32 euros per share, with the deal valuing the entire company at 2.6 billion euros. ‘euros. The transaction with IBM is subject to regulatory approvals and is expected to close in the second quarter of 2024.
Nio, the Chinese manufacturer of electric vehicles, listed on Wall Street, soars 12% before market while the group has just signed an agreement for an investment of 2.2 billion dollars with CYVN Holdings, an investment vehicle based in Abu Dhabi. This angel investment comes as Nio, whose revenues and results remain under pressure with the price war launched by Tesla, is trying to reorganize itself by reducing its workforce. The deal should be sealed by the end of the month and would bring CYVN’s stake to more than 20% of Nio’s capital, following an investment of one billion dollars already made in July. CYVN would thus appear as the main shareholder of Nio, whose founder and CEO William Li would still retain a greater number of voting rights. CYVN would subscribe for 294,000,000 Class A ordinary shares issued by Nio at a price of $7.50 each.
PGT Innovations jumped 10% before market on Wall Street. Door designer Masonite International has announced an offer to acquire the window and door supplier for $3 billion. Masonite estimates that this ‘transformative’ transaction will create an industry leader with combined revenues of more than $4 billion. PGT had just rejected a $2.2 billion proposal from Miter Brands, a competitor backed by Koch Industries, according to Reuters. Under the terms of the Masonite deal, PGT shareholders would receive $41 per share, including $33.5 in cash and $7.5 in Masonite common stock.
Wyndham Hotels & Resorts. The hotel operator’s board of directors asked its shareholders to reject Choice Hotels’ exchange offer, citing a review by regulators of up to 24 months and a valuation deemed too low and inadequate.
Adobe, the American software group, has abandoned its plan to buy the design platform Figma for 20 billion dollars, in the absence of a clear path to receive approval from the European and British competition authorities. The British competition authority had indicated that Adobe would not propose corrective measures to resolve the problems raised as part of the deal. Adobe and Figma say they disagree with recent findings from regulatory authorities, and believe it is in their best interest to “move forward independently,” according to Adobe CEO Shantanu Narayen.
