US Market Update: Strong Data, Mega Mergers Unable to Propel Fresh Record Highs in US Equities



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Article content US Market Update: Strong Data, Mega Mergers Unable to Propel Fresh Record Highs in US Equities

23.06.2014 20:27 Monday
***Economic Data***
- (IL) Israel May Unemployment Rate: 5.9 v 5.7% prior
- (US) May Chicago Fed National Activity Index: +0.21 v +0.20e
- (IL) Israel Central Bank Leaves Base Rate unchanged at 0.75%
- (MX) Mexico May Unemployment Rate NSA: 4.9% v 4.8%e; Unemployment Rate (Seasonally Adj): 5.0% v 4.8%e
- (US) Jun Preliminary Markit Manufacturing PMI: 57.5 v 56.0e
- (US) May Existing Home Sales: 4.89M v 4.74Me

- The very good US data is staving off the less than positive tone that came out of Asia and Europe this morning, however investors are reluctant to send risk assets higher this morning. As of writing, the DJIA is down 0.16%, the S&P500 is flat and the Nasdaq is down 0.10%. Trading volumes are still subpar.

- The May Markit manufacturing PMI data pushed out to its highest level since May 2010, confirming other signs of a takeoff in the US manufacturing sector. The output and new order components both rose above 61, although the new orders component slowed from May, to 50.9. The very strong US data contrasted sharply with France's steeper manufacturing contraction and the uninspiring Germany PMI numbers seen in data out earlier this morning. Also recall that China's flash manufacturing PMI of 50.8 was the highest since last November and the first expansion in the series in six months.

- France's Alstom accepted General Electric's $13.5 billion offer to acquire the firm's power generation and grid businesses. The deal comes after the French government got an option to buy as much as 20% of Alstom from Bouygues in the 20 months following the closing of the GE-Alstom deal, giving the government the guarantee it needed that Alstom will remain a French firm, even with the multiple JV deals it enters as part of the GE deal. The GE deal is expected to close in 2015.

- Oracle reached a deal to acquire Micros Systems for $68/shr in cash, in a total deal valued at $5.3 billion (or $4.6 billion net of cash). This is the company's biggest buy since acquiring Sun Microsystems for $7.4 billion back in 2009. The Micros deal gets Oracle a major provider of point-of-sale systems like Internet-connected cash registers. Micros says its products are used at 330,000 sites in 180 countries.

- Midwest utilities Wisconsin Energy and Integrys Energy have entered an all-stock merger valued at $9.1 billion. Integrys' shareholders will receive common stock at a fixed exchange ratio of 1.128 Wisconsin Energy shares plus $18.58 in cash per Integrys share. Total consideration is valued at $71.47 per Integrys share. The combined entity is projected to have a regulated rate base of $16.8 billion in 2015, serve more than 4.3 million total gas and electric customers across Wisconsin, Illinois, Michigan and Minnesota.

- There were several smaller deals as well, with Harbinger Captial offering to acquire retailer Central Garden & Pet for $10/shr and PLX Technology agreeing to be bought by Avago for around $298 million in cash. There was also talk that Yahoo could be considering making a rival bid for OpenTable, against the pending Priceline offer of $103/shr.

***Looking Ahead**

- 15:00 (AR) Argentina Q1 Current Account Balance: -$3.7Be v -$1.7B prior
- 15:00 (AR) Argentina Q1 GDP Y/Y: 0.5%e v 1.4% prior
- 16:00 (US) Crop Condition Report