Futures ~45bps higher this morning on some early “push-pull” action. U.S markets were pushed higher by strong European action (despite continued bailout concerns for Ireland and a deficit revision higher in Greece) throughout their session thus far (+80bps) and then spiked further on “Merger Monday” news of a $92/share (32% premium) bid for Bucyrus (BUCY) from Caterpillar (CAT) and a $33.85 bid for ISLN from EMC. Massey Energy (MEE) is also rumored at a takeout candidate, perhaps by steel giant ArcelorMittal (MT). Additionally, good news in the form of October Advance Retail Sales (+1.2% vs. +0.7%/e) also pushed futures higher. However, futures were pulled down off those highs after a much worse than expected Empire Manufacturing survey (-11.14 vs. +14/e) release. Also, BHP on Sunday officially pulled its $40 billion bid for
’s Potash (POT) due to government opposition to the deal. Net net, this morning’s positive news is slightly outweighing the bad. Asia mixed overnight (no official Canada tightening, as yet). USD +30bps. Gold +20bps. Oil +70bps. China
Plenty of interesting reading over the weekend, and the general themes were “anti-QE2” and caution on the municipal bond markets. Here’s a cut-and-paste, with links, from JPM research:
· Fed official says QE2 is feeding bubbles in risk assets; Fed’s Fisher says a bubble already appears to be forming in private equity, w/the terms on some deals returning to the levels of ’06-’07 (Fisher singles out the recent Carlyle/SVR transaction); Fisher said he was worried by what he saw as signs of “speculative activity” in stocks, bonds, and commodities. CNBC/Reuters http://bit.ly/9QVXNC
· Greenspan on Meet The Press warned about a potential crisis in the Treasury markets unless action is taken to cut the
budget deficit – Reuters US
· Muni bond market “shudders”, leaving investors to wonder if there will be more bad news for the sector – worries about the credit worthiness of the country’s state and local governments, combined w/a huge pipeline of bond sales, has hurt prices. NYT http://nyti.ms/dd77O9
· WSJ muni article – prices sold off last week, sending a “shiver” through the market. Investors cited a big backlog of deals (thanks to worries re the fate of Build
Bonds), credit concerns, and the effects of QE2. The new GOP majority could mean less federal aid for states. WSJ http://on.wsj.com/cpHn2K America
· Muni bond sales projected to surge this week - municipal bond sales are expected to total $24.4 billion in 279 sales this week, more than 2.5 times the estimated $9.6 billion last week – Reuters
· Scientists now think sea levels could rise ~3 feet this century while other are fearful of a rise of as much as 6 feet; the former number would pose serious risks to coastal regions around the world, w/flooding becoming much more frequent, while the later would jeopardize some of the world’s great cities – NYT http://nyti.ms/92nwVJ
· The G20 meeting wrapped up Fri morning and the US performance continues to be panned in the press; not only did the White House fail to sign a trade pact w/South Korea on the sidelines of the event, but the US failed to have any of its signature aims get codified in the final communiqué. Officials from around the world were highly critical of the Fed’s QE2 (which Obama, in a move rare for a
president, defended). The review articles haven’t been kind, inc. “Embarrassment in US ” (WSJ; http://on.wsj.com/auLqtf) Seoul
Ireland – The BBC has learned that , which is facing mounting concern about its economy, is in preliminary talks with EU officials about possible financial support. The Irish government has denied such talks are taking place, but the BBC's Business Correspondent, Joe Lynam, says it only a matter of time before a formal request is made. BBC http://bbc.in/bsJ7Tv Ireland
– the country may consider a series of measures aimed at preventing “hot money” from hitting its shores. Ma Delun, a deputy governor of central bank the People's Bank of China (PBOC) said such a policy kit would include reserve requirement adjustment, management of foreign exchange positions, and open market operations – Reuters http://reut.rs/b08fvG China
· How to make the dollar sound again – James Grant - why the US should consider returning to the gold standard – NYT http://nyti.ms/8XeGUw
· Obama - One and done: To be a great president, Obama should not seek reelection in 2012 –
Post. http://wapo.st/dmEpEO Washington
· Is the
Presidency too big a job? Newsweek. Among a handful of presidential historians NEWSWEEK contacted for this story, there was a general consensus that the modern presidency may have become too bloated. “The growth is exponential in these last 50 years, especially the number of things that are expected of the president,” http://bit.ly/cwLroQ US
· House investigations - Here are 9 investigations Darrell Issa’s House Oversight Committee is likely to take up — and 10 more that we really need – NYT http://nyti.ms/bXXnfl
AKAM downgrade at OPCO. JOYG higher on BUCY takeout. ASTM files for $75M offering. LLNW cut at OPCO. BofAMLCO ups COR, GBL. CITI ups CL, PVH. GSCO ups KWK. BARD ups UNP. WEFA ups IDA. MCCC to be acquired for $8.75/share by Rocco Commisso. CSUN beats by 18c. DYN upgrade at JPM. DBAB ups RJET. F reports Super Duty truck has 50% market share. HBE reports higher takeout price from KTOS. RINO misses by 11c. PUDA misses. MEI wins General Motors contract. THOR downgrade and tgt cut at Leerik Swann. TSTC beats earnings estimates. CITI cuts ERF. COWN cuts STRI. DBAB cuts MON. MSCO cuts RAX. Nomura cuts JASO. STFL cuts UNH, WLP.
S&P 500 PreMarket 8:30am (last/% change prior close/volume):
Today’s Trivia: What was Malcolm X’s birth name?
Yesterday’s Question: What mathematical symbol did math whiz Ferdinand von Lindemann determine to be a transcendental number in 1882?
Yesterday's Answer: Pi.