Wall Street returned to its best levels of the year on Monday, while the week will be lively from an economic and monetary point of view. The S&P 500 advanced 0.39% to 4,622 pts, while the Dow Jones gained 0.43% to 36,404 pts. The Nasdaq for its part gained 0.43% to 14,432 pts. On the Nymex, a barrel of WTI crude is still consolidating at $72. An ounce of gold fell to $1,981. The dollar index gains 0.1% against a basket of currencies. On the bond markets, the yield on the 2-year T-Bond is $4.76, the 10-year at 4.27% and the 30-year at 4.35%.
Operators will monitor the consumer price index for the month of November on Tuesday (2:30 p.m., FactSet consensus stable compared to the previous month and +3.1% year-on-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 Tuesday evening at 8 p.m. (-$214 billion FactSet consensus).
The Fed’s monetary meeting (FOMC) also begins on Tuesday. The Fed’s monetary statement will thus 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 should very probably 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 Atlanta Fed’s inflation expectations index, as well as the weekly report on American domestic oil stocks will be revealed.
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, Friday, “Four Witches” day (simultaneous expiry of 4 types of contracts: options on indices and on stocks, as well as futures contracts on indices and stocks), investors will follow the manufacturing index Empire State from the New York Fed, industrial production figures, as well as the flash US composite PMI index.
In corporate news on Wall Street this week, Oracle and Caseys General Stores report quarterly financial results after market trading. Johnson Controls will announce its results before market on Tuesday. Adobe and Nordson Corporation reveal their results Wednesday evening. Costco Wholesale (after market), Lennar, Jabil and Manchester United will announce their accounts on Thursday. Darden Restaurants will finally be on the Friday menu…
Values
Cigna (+16.7%), the American health insurer has put an end to its attempt to buy rival Humana (-1%), the two groups having failed to agree on a price, declared to the Reuters agency two sources close to the matter… The firm has also announced its intention to buy back $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 (+19.4%), the American department store chain, has received a $5.8 billion buyout offer from real estate investor Arkhouse Management and asset manager Brigade Capital Management, said Sunday told Yahoo Finance a source close to the matter. 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 (+1%) 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 (-1.8%) 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.
The other ‘Magnificent Seven’ are also suffering on the stock market, arbitraged towards medium-sized technology stocks. Tesla, Microsoft, Apple, Amazon, Alphabet and Meta thus lost between 1 and 2%…