Chicago Bridge & Iron Co. (CBI) agreed to buy SHAW for a price of $3 billion, or $41 cash and $5 stock over the weekend causing a massive gain in SHAW’s stock price. The acquisition will create one of the world’s largest energy service firms. SHAW will bring a new nuclear sector to CBI’s portfolio, with the first nuclear reactor design permitted since 1978. This deal marks the largest construction and engineering industry merger of the 79 deals sealed this year with an average premium of around 10%.the deal is expected to be completed in early 2013 after approval from shareholders, management and regulators.
David Cornes holds a degree in economics from the University of Montana.
The only announcement today in the market is the Dallas Fed Manufacturing survey. The report is due out at 10:30am.
The S&P 500 is up once again at 1.91% while 10-year treasuries are down 0.32%. Oil is down as well at 0.75% and the dollar is up at 0.27%.
What should you watch for today? Gold. All over every finance site there are chartists and analysts claiming that gold may be ready to make some big moves this week. It was only up 2.2% at the close on Friday but make sure to watch today and see if all the hype comes true.
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The Hang Seng was the top performing Asian Index adding 1.6% on the day. HSBC holdings rose 1.7% ahead of its earnings announcement. HSBC is down 4.7% for July however, up 10.7% on the year. Tingyi, China resources land, and China resources power were the only losers of the day each down between 1 and 1.5% while the biggest gainer was Sands China up 5.71%.
The FTSEurofirst is up 1.1% on the day so far, at 1,068 a level not seen since April. The support comes from Italy’s debt sale of 5.48B euros of government bonds, the rate of which dropped to 5.96% from 6.19% from the auction in June. This escalated Italy’s FTSE MIB 2.7% and Spain’s IBEX 2.1%.
EU competition authorities charge Teva, Servier, Mylan labs and three other companies with blocking generic perindopril drugs, which treats hypertension, from entering the market.
Former FED economist Ward McCarthy suggests the Fed may lower interest paid on reserves to 0%, which should inject cash into the economy. Crude, natural gas and silver are all set to begin the day with slight gains, while gold is down just .05%.
Contributer Chris Rygh is currently pursuing his MBA in Wisconsin and has a passion for the Market. Comments can be directed to ryghcw19@uww.edu
In corporate news, Merck (MRK) gained 4.07% after the pharamaceutical company reported better than expected second quarter earnings and revenue. Starbucks slid -9.42% after the coffee chain’s fiscal third-quarter earnings missed forecasts, and it issued outlooks for the fourth quarter and fiscal 2013 that were below current projections.
S&P 500 futures gained 15.75 points to 1370.50 this morning and has been trading near the highs all morning. NASDAQ futures rallied 42 points to 2614.50 and Dow Jones Industrial Average futures gained 108 points to 12933.00.
Crude and gold futures took it relatively easy compared to the beginning of the week with gold only up $2.70 to $1617.80 and WTI crude futures up 53 cents to $89.92.
Facebook Inc. (FB) had a terrible start this morning, falling as low as $22.28 and currently trading at $24.26. FB closed at $26.84 last night before posting weak earnings. I wonder if shares would be trading differently if their IPO underwriters properly priced their IPO?
Coffee giants across the nation also posted weak results this morning and lost ground as Starbucks Corp. (SBUX) lost over 11% and Caribou Coffee Co. (CBOU) down over 5%. SBUX posted in increase in earnings, but slowing growth and weak guidance.
Expedia Inc. (EXPE) gained over 25% as hotel revenue led the travel discount company’s revenue for the previous quarter.
Arch Coal Inc. (ACI) had an 11% gain this morning after better than expected revenue results. I like to see coal stocks rebound after last month’s bloodbath for the industry.
The Chicago based, and soon-to-be London based reinsurance company Aon PLC (AON) rose 5% after releasing weak earnings, yet strong revenues.
Netgear Inc. (NTGR) fell 7.4% after posting weak earnings and poor guidance based on the weakening global economy.
David Cornes holds a degree in economics from the University of Montana.
The AIA group, Asia’s third largest insurer, slipped .2% today, however posted a larger than expected increase in value of new business in the first half of the year. The Banking sector rose today after Shanghai Securities News announced Chinese banks have until 2018 to meet new capital-adequacy rules. Industry and Commercial Bank of China rose 2.7% and Bank of China 2.1%.
Europe is having a choppy trading day, however the FTSEurofirst has managed a .1% gain on yesterday’s comments by European Central Bank Leader Mario Draghi. The day has been held back by a Spanish report showing unemployment staggeringly high at 24.6% in Q2, the highest on record. The Euro is up again today at 1.2309.
The SEC and department of justice are considering investigating retailers for breaches of anti-foreign bribery laws after allegations came in from Mexico against Wal-Mart.
Commodities are beginning mixed again today with crude and silver up as natural gas and silver are slacking at the moment.
Contributer Chris Rygh is currently pursuing his MBA in Wisconsin and has a passion for the Market. Comments can be directed to ryghcw19@uww.edu
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