WASHINGTON, August 25, 2014 – We expect reports to be light during this pre-Labor Day trading week. Those whose kids are still not back in school are getting in their last holiday fling and trading will be light unless ISIS destroys Chicago, which they’re threatening to do.
Nevertheless, M&A is, like June, still popping up all over, with two more merger/acquisitions either on the table or about to be. Clearly the most toothsome and incrediburgible of these deals has the increasingly aggressive Burger King (BKW) chain reportedly in merger talks with Canada’s Doughnut King Tim Hortons (THI). Market cap is reputedly somewhere in the vicinity of $18 billion.
This tasty investment treat will likely become even more mouth-watering when investors figure out that not only does this proposed corporate combo have tasty synergistic possibilities. It is also likely to become another chapter in America’s corporate inversion sweepstakes as U.S. companies make a mad dash for the visa door before His Imperial Majesty Barack the Ineffective issues an executive order decreeing that this game is done. What better way to encourage American businesses to remain headquartered here than to roundly punish those that don’t.
Another flavor of the M&A&Inversion game is less likely to be in the White House’s line of fire. This one appears to be a done deal, with Swiss pharmaceutical giant Roche (RHHBY) announcing it’s going to pick up hot U.S. biotech player InterMune (ITMN) via a $74 per share tender offer. That’s another tasty treat for biotech fans and should juice both those stocks and various bio ETFs today.
And speaking of today’s markets, San Francisco-Napa Valley earthquake and ISIS advances in Syria aside, is exploding upwards this morning, with the Dow up 94, the S&P 500 up 11, and the tech-heavy NASDAQ up 28 in relatively thin trading.
We plan to mostly hold our fire, trading-wise, this week. Moves may be deceptive. Headline risk is great. And in a thinly traded market, moves both up and down are likely to be super-sized. Michelle would likely disapprove of that, so we’ll mostly be on a stock diet this week, save, perhaps, for picking up a little of the short S&P ETF (symbol SH) just in case.
We’ll be back occasionally this week if news or trading warrants. Have a good one.