Wall Street consolidates before market this Monday, while the week will be quite lively from an economic and monetary point of view. The S&P 500 lost 0.1% and the Nasdaq 0.2%, while the Dow Jones returned a few points. Economic and financial news is very limited this Monday across the Atlantic, but things will accelerate tomorrow. On the Nymex, a barrel of WTI crude stabilizes at $71.2. An ounce of gold fell by 0.3% to $2,008. The dollar index gains 0.1% against a basket of currencies. On the bond markets, the yield on the 2-year T-Bond is $4.77, the 10-year at 4.27% and the 30-year at 4.35%.
Operators will therefore monitor tomorrow, Tuesday, the consumer price index for the month of November (2:30 p.m., FactSet consensus stable compared to the previous month and +3.1% over one year, +0.3% and +4% excluding food and energy; average hourly wage expected at +0.3% compared to the previous month and +4% over one year). The November budget balance will be revealed tomorrow evening at 8 p.m. (-$214 billion FactSet consensus).
The Fed’s monetary meeting (FOMC) begins tomorrow. The Fed’s monetary statement will be revealed on Wednesday at 8 p.m., while Jerome Powell’s conference will be held at 8:30 p.m. The American central bank will most likely leave its rates unchanged between 5.25 and 5.5% on fed funds (probability of more than 98% according to the FedWatch barometer). The markets anticipate a potential monetary easing on March 20 (approximately 42% probability) or May 1, 2024… Also on Wednesday, the producer price index in the United States, the index of expectations of inflation from the Atlanta Fed, as well as the weekly report on US domestic oil stocks.
Thursday, the day will be marked by announcements of weekly unemployment registrations, retail sales, import and export prices, as well as business stocks and sales.
Finally, on Friday, Four Witches Day (simultaneous expiration of 4 types of contracts: index and stock options, as well as index and stock futures), investors will follow the Empire State manufacturing index from the New York Fed, industrial production figures, as well as the US composite flash PMI index.
In corporate news on Wall Street this week, Oracle and Caseys General Stores are releasing their quarterly financial results after market trading on Monday. Johnson Controls reports pre-market results tomorrow. Adobe and Nordson Corporation reveal their results Wednesday evening. Costco Wholesale (after market), Lennar, Jabil and Manchester United announce Thursday. Darden Restaurants will finally be on the Friday menu.
Values
Cigna, an American health insurer, has ended its attempt to buy rival Humana after the two groups failed to agree on a price, two sources familiar with the matter told Reuters. The firm also announced its intention to repurchase $10 billion of its own shares. A merger between the two groups would have created a sector giant, but would also have attracted fierce antitrust scrutiny, according to Reuters. Negotiations ended “because the parties were unable to agree on the price,” two Reuters sources said, without ruling out a later merger. Cigna announced plans on Sunday to make an additional $10 billion in share repurchases, bringing the total repurchases to $11.3 billion. Management considers Cigna shares “significantly undervalued”.
David Cordani, Cigna’s chairman and CEO, also says the company would consider targeted acquisitions aligned with its strategy as well as “value-enhancing” divestitures. The group is reportedly studying the sale of its Medicare Advantage business, which manages government health insurance for people aged 65 and over, according to Reuters sources.
Macy’s, the American department store chain, has reportedly received a $5.8 billion buyout offer from real estate investor Arkhouse Management and asset manager Brigade Capital Management, a source told Yahoo Finance on Sunday close to the file. The offer would value Macy’s at approximately $21 per share and would have been submitted on December 1. The company’s board of directors is reportedly currently considering the proposal. The Wall Street Journal also reported yesterday on the offer earlier on Sunday. The offering price would represent a 32% premium to Macy’s closing price on November 30. According to the WSJ, Arkhouse and Brigade therefore consider Macy’s undervalued and have even indicated that they were willing to raise their offer subject to audits. The investors submitted a letter from an investment bank showing they had the capacity to raise the funds needed to complete the potential transaction.
Occidental Petroleum will acquire energy producer CrownRock in a cash and stock transaction valued at $12 billion. Occidental thus intends to increase its permits in the Permian Basin. The West Houston group will finance the operation with $9.1 billion in new debt and the issuance of approximately $1.7 billion in securities. The group will take on $1.2 billion of CrownRock’s existing debt. The transaction is expected to close in the first quarter of 2024. It would be immediately accretive in terms of free cash flow. The deal would give Occidental, a producer backed by Berkshire Hathaway and Warren Buffett, more than 94,000 net acres in Texas’ Midland Basin.
Nvidia plans to establish a base in Vietnam to develop the country’s semiconductor industry, according to Reuters, which cites statements from the Vietnamese government as well as those of the group’s management. The CEO of the American group, Jensen Huang, affirmed that Nvidia will expand its collaboration with Vietnam’s largest technology companies and help the country train talents to develop AI and digital infrastructure. Nvidia has already invested $250 million in Vietnam. The group has partnered with local technology companies to deploy AI in the cloud, automotive and health sectors, adds Reuters, citing a document published by the White House in September. “Vietnam is already our partner because we have millions of customers here,” said Jensen Huang during an event in Hanoi. “Vietnam and Nvidia will deepen their relationship, with Viettel, FPT, Vingroup and VNG being the partners with whom Nvidia seeks to expand its partnership,” Huang added. Nvidia will support local training and infrastructure.
