Reuters Insider - Trading at Noon: Carl Icahn buys stock that Bill Ackman sold
31/05/2016 18:46
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Description: Carl Icahn discloses a stake in drug stock that
Bill Ackman sold.
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Transcript (May be auto-generated)
A mixed bag of economic data out on the US economy this morning. Now, let's go
to Dan Burns here. He is our Financials Markets Editor, and you're here to make
sense of this. Let's start with consumer spending- surging to its highest level
in more than six years. Right, and the big jump in that was really driven by a
big leap- about 2.2% month-over-month in consumption of durable goods. And that
correlated very strongly with an increase we'd already seen in car sales back in
April, so that was a big chunk of that. But it was- again, it was the biggest
increase in consumption of durables in a couple of years, so pretty strong
figure. Pretty strong- take a look there, up 1%, estimates calling for 0.7%.
Right.
And the core PCE index, which is clearly of concern to the Fed, it didn't- it
had fallen back the previous month, the 1.6% or 1.8%. That held steady at 1.6%.
It's still below the Fed's target but it's not retreating away from it, which
should be something of a positive or green light signal for the Fed. Wasn't all
good news, Dan. Consumer confidence, Chicago PMI coming in a little bit light
there. Right. And the Chicago PMI series has been very volatile. It typically
is. It's been hovering in this 50-mark- above 50 shows expansion; below 50 shows
contraction. It hasn't been growing enormously or falling off or contracting all
that enormously recently, but it is a bit noisy. Consumer confidence- these are
still pretty historically high figures so- while it eased back a bit. We saw
comparable move down in the University of Michigan Consumer Confidence figures a
week before that. So still pretty strong on those fronts and it's a little bit
of a get-back. It isn't all that surprising. Now, another pretty significant
report out this week- the jobs report for the month of May out on Friday. How
big of a deal is this of course for the upcoming Fed meeting a couple of weeks?
Well, it is the last snap shot we'll have of the US employment seen before the
Fed meets in the middle of June. Any big departure from trend, which has been
around 200,000- it was a clearly off that in the most recent report. But
anything- any big departure off that might be enough to give them pause to see
if something is really slowing down here. But we have a number of economists who
have been suggesting that as long as it stays solidly north of a 100,000 a month
in job creation, we are generating the kind of employment growth that will
continue to feed into this nascent trend we've seen of wage growth, which is
something that the Fed has been really keeping an eye on. We've seen some early
signs that it's taking route as long as we get numbers that continue to support
the notion that wage growth is here and it's sticky. That again is another
pretty positive signal for the Fed to act- maybe not in June, possibly more like
July. Right. And of course, Fed Chair Janet Yellen on Friday, echoing similar
sentiments. Exactly. If we continue to see that strong jobs number or strong
economic data. They may move. Let's take a check of the markets, Dan, and see
where we are. We've been pretty mixed today. Take a look there. Right, a little
of weakness in the Dow. And the S&P has been a couple of points above and below
positive all day long, as does the NASDAQ. We're rounding out May, right, the
last trading day of May. We're going to finish the month up for the third
straight month in the row. This is something the S&P 500 - is our benchmark - it
hasn't managed to do a three-month winning streak since the end of 2013, so
pretty positive. And over the last three months in a total return
basis, the S&P is up about a little over 9%- again, it's strong three-month run
since the period from October to December, 2013. Really good outperformance,
particularly against their chief rival bonds. Bonds have treaded water over the
last couple of months. They're actually going to build- it looks like bonds are
going to end the month slightly negative for the first time this year. Now, that
it seems I guess like markets are sort of getting more comfortable with the idea
of this rate hike? It really does, right? And what we're looking at here?
This is data just out at the end of last week. It's the CFTC's weekly
commitments of trader data. We're specifically looking at the speculative
positions- the net Speculative Positions in the S&P 500 E-Minis- the big futures
contract that tracks the S&P 500. And you could see it jumped in the last week
to the highest since February 2015. Wow, all the way back here. So about 15
months, right? And we've been positive over the last couple of months after
being consistently negative by the speculative crowd for over a year. And you
could see they flip from positive to negative here on the chart. And this is-
right in here, this is where we made the S&P all-time high- mid-May or so-
mid-May last year and they had already gone negative on stocks by that time. Now
they flip back and of course we're right back with the S&P- kind of
flirting with that figure. We're only about 30 points south of that historic
high close, from last May. And it looks like some people are on the spec front.
Hedge funds look like they're ready to get back into the game. Interesting on
the flipside, the specs have turned negative pretty pronouncedly so on bonds, on
Treasuries- in particular, short-term Treasuries, two-year Treasury. Positioning
is the most negative in over a year. That's not surprising if you think the
Fed's going to hike rates, because that's going to nudge the yield at the front
of the yield curve up higher, which mean bond prices go down. Right, so all eyes
on that Fed meeting coming up at the middle of June. Dan Burns, thank you so
much for coming on and make sense of all this for us today.
Sure. Alright, let's move on and take a check at some stocks that are on the
move at this hour. We have a deal happening in the US power distribution market.
Take a look at those stocks there. Great Plains Energy- they're buying rival
Westar for $8.6 billions. Great planes- the acquirer down about 5%. Westar
Energy moving higher by about 8% to about $57 though. That is below the offer
price of $60 a share. Great Plains- as you take a look at those stocks there.
Now, this is just the latest deal in the space this year alone. Dominion
Resources said it would buy "Questar", and Exelon closed its merger with Pepco.
Now onto another deal happening today- PE firm Vista Equity Partners buying
cloud-based marketing software company Marketo for $1.8 billion in cash. Vista
paying about $35.25 per share. Take a look, just a little bit higher than where
the stock is trading away now.
A $9.9 premium to the company's Friday closing price. And lastly, Botox maker
Allergan, moving higher by about 1% at this hour. Billionaire Investor Carl
Icahn disclosed a large position in the company on Tuesday. And Icahn also
saying that he was very supportive of the company's CEO Brent Saunders. Now,
this comes out just months after Allergan's plans to be acquired by Pfizer fell
apart. The company of course now trying to close the sale of its generic
business- the Teva Pharmaceuticals there. Of course, Activist Investor Bill
Ackman once owned shares of Allergan back in 2014 and got out of the stock and
made a ton load of money on that. So that's a wrap for Trading at Noon on this
Tuesday. I'm Leah Duncan. This is Reuters