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Reports US

US stock market, economy and companies update (June 09, 2014)

June 9, 2014, Monday, 16:21 GMT | 11:21 EST | 19:51 IST | 22:21 SGT
Contributed by Trade The News


- US equities are making moderate gains this morning, and it is a rare session when the VIX is gaining along with broader equity markets. As of writing, the DJIA is up 0.13%, the S&P500 is up 0.08% and the Nasdaq is up 0.30%.

- Global fixed income markets continue to adjust to the ECB decision last week: the US 10-year yield is back above 2.600% for the first time since mid May, putting it at a higher yield than the Spanish 10-year, which is at 2.580%. The Portuguese 10-year spread narrowed to just 200 bps above the German bund.

- St. Louis Fed President and noted dove Bullard sounded a hawkish note in comments out this morning. In remarks to reports after a speech, Bullard said that GDP could grow in excess of 3% in the final three quarters of the year, which would "adjust rate-liftoff timetable." Earlier, he said that the Fed was closer to achieving its goals than it had been in most times since 1960, and the economy was more normal now that it has been for five years.

- The pharmaceutical industry consolidation story continues today: Merck has a deal in hand to buy biotech name Idenix Pharmaceuticals for $24.50/shr, in a total deal valued at $3.9 billion. The deal gives Merck a good position in the hot hepatitis C area, where Idenix has promising portfolio of drug candidates. CNBC's Faber reported that Merck paid a huge premium for the company, following a bidding war with Johnson & Johnson and AbbVie. Other hep C biotech names are up big on the deal news, most notably Achillion, with its nucleotide polyermase inhibitor technology. ACHN is up more than 30%.

- Tyson Foods has won the contest for Hillshire Brands, beating out Pilgrim's Pride after the latter did not raise its $55/shr offer over the weekend. This morning Tyson confirmed that Hillshire had preliminarily accepted its offer of $63/shr in cash, making a total deal valued at $8.55B, including Hillshire's outstanding debt. Final acceptance comes after Hillshire withdraws from its prior deal to acquire Pinnacle Foods.

- Fresh off victories in his activist campaigns against Forest Laboratories and eBay, Carl Icahn has announced a new target. Icahn revealed a 9.4% stake in Family Dollar on Friday, prompting the company to adopt a shareholder rights plan to prevent him from gaining sizable control over it. In the filing out on Friday, Icahn indicated that he intended to have conversations with management about "enhancing shareholder value," and Fox's Gasparino reported that Icahn would push for FDO to look for a merger, possibly with Dollar General. Shares of FDO are up 14% and DG is up 11%.

- Gambling stocks are tumbling on some bad news out of Macau. Two analyst notes suggest that headwinds impacting the enclave, where business has been slowing over recent months, would hurt Wynn and Las Vegas Sands. Morgan Stanley wrote that in June, gambling companies in Macau could see their first q/q decline in EBITDA in four years. Deutsche Bank cut its 2014 revenue growth target for Macau and downgraded Wynn Macau. MGM and LVS were down 3.5% in the first minutes of cash trade and MGM was down more than 4%, although all three have moved a bit higher mid-morning.

***Looking Ahead***
- (US) Fed's Rosengren speaks in Guatemala
- (IR) US-Iran talks in Geneva
- (UR) Ukraine-Russia gas talks
- 11:30 (US) Treasury to sell $48B in 3-month and 6-month Bills
- 17:00 (CO) Colombia Apr Exports: $4.7Be v $4.4B prior
- 19:01 (UK) May BRC Sales Like-For-Like Y/Y: No est v 4.2% prior
- 21:30 (CN) China May PPI Y/Y: -1.5%e v -2.0% prior
- 21:30 (CN) China May CPI Y/Y: 2.4%e v 1.8% prior
- (PE) Peru Apr Trade Balance: No est v -$441M prior


***Economic Data***
- (PT) Portugal Apr Trade Balance: -€627M v -€749M prior
- (PT) Portugal Q1 Final GDP Q/Q: -0.6% v -0.7%e; Y/Y: 1.3% v 1.2%e
- (IE) Ireland May Consumer Confidence Index: 79.4 v 87.2 prior
- (CA) Canada May Annualized Housing Starts: 198.3K v 185.0Ke
- (CL) Chile May Trade Balance: $1.5B v $1.1Be
- (CL) Chile May Copper Exports: $3.5B v $3.1B prior
- (RU) Russia May Light Vehicle Car Sales Y/Y: -12% v -5%e
- (MX) Mexico May CPI M/M: -0.3% v -0.4%e; Y/Y: 3.5% v 3.5%e; CPI Core M/M: 0.2% v 0.1%e
- (MX) Mexico May Vehicle Production: 287.5K v 248.0K prior