Monday Morning – Merger Mania!

Alcoa reports in 6 business days, and next Tuesday kicks off earnings season.

It’s hard to imagine the market getting too excited ahead of some very solid evidence that will be coming in next week and, as usual, how they digest those earnings will tell us a lot more than the earnings themselves (much like my Grandfather at a Mexican restaurant!).

We also have a lot of data to digest this week, here’s the rundown from Briefing.com:

We’ll find out pretty quickly this morning if I am wrong about the ISM, which should give the markets a nice boost if the numbers are good.  I don’t know if it’s going to be enough to dump all our puts but I would have to think twice if we get off to a nice start today. 

As usual, we have Merger Mania on Monday with KKR making an offer to buy FDC for $29Bn,  taking another $20Bn worth of shares off the market.  XRX is buying GISX for a 50% premium (and I don’t know what they’re thinking there) so we’ll be adding the XRX May $17 puts for .60 today,  GOOG and MSFT are vying for DoubleClick, who steer business to on-line publishers.  This used to be called monopolizing a space but now it’s just called unbridled capitalism, just like it was at the beginning of last century!  At least in 1907 big business used to form "Trust" companies to hide the fact that they were attempting to control every aspect of an industry…

T has finished rebuilding their US monopoly after a 20-year break-up and are now making a move to buy TI for $3.5Bn with "co-bidder" AMX (who is an affiliate of T).  I think the futurists had it wrong when they predicted that Corporate Wars would supplant actual wars in the future – apparently there won’t be enough corporations left to fight and they are already carving up the spoils in a bloodless victory.

The victory was anything but bloodless for the bears in Japan as the Nikkei plunged 259 points as manufacturers there show little faith in the US pulling this slump out of a hat.  They were the survivor compared to India, which took a 640-point plunge (the 5% rule) as they tightened monetary policy, but how much do you want to bet that we will be told Asian trading was "mixed" today by Criminal Narrators Boosting Crude because the Hang Seng gained 8 points?

We know who controls the European press – Rupert Murdoch, our man at Fox, he also controls the satellite television (they don’t have much cable) in most of Europe and Asia.  So the Europeans are trading flat and are unlikely to release any polls showing poor consumer confidence over there unless Mr. Murdoch decides to go shopping.  There’s still that Iran thing with England and KKR is buying something over there for $20Bn but who can even keep track…

US markets have no excuse not to rally as the ENTIRE inflow of capital into US markets last month was less than $100Bn and here we have well over $50Bn of stocks going private just in the deals we discussed this morning.  One would even wonder how the market could NOT gain hundreds of points in this environment.  So I’m not going to bother with a chart today as time is short and, very obviously, up is good and down is awful.

Down will also be awful for the oil patch who have no excuse for not getting crude back to $70 but Zman and I will be keeping an eye on natural gas storage, which remains dangerously high and hopefully someone will explain to us why, at $66, no one in Texas is planning to drill for more oil this year (permits down over 25%):

Sure one might be led to wonder why, with our foreign oil supply in "jeopardy" that 1/3 LESS drilling permits are being filed this quarter vs. the same quarter last year but if you were the sort of person who asked those kind of questions you would be a journalist, and good luck getting a job in journalism if you plan to question the status quo!

A journalist may question how this country plans on switching to more ethanol-based fuels when only 1,000 of the 170,000 gas stations in this country are equipped to sell it and many others are contractually prohibited from purchasing oil from "other suppliers."  A journalist might also wonder why gold prices continue to go down during this crisis but again – what channel would hire you? 

Money is the great power today. Men sell their souls for it. Women sell their bodies for it. Others worship it. The money power has grown so great that the issue of all issues is whether the corporation shall rule this country or the country shall again rule the corporations.  –Joseph Pulitzer, December 1878.

TRB looks like it will come off the market too, with Sam Zell somehow taking that $8Bn corporation off the market for just $300M in cash and I will be shorting whatever bank they get to take notes on this deal!  It should be noted that this puts the Chicago Tribune,  the Los Angeles Times and several TV stations into the hands for the 54th richest person in America ($4.5Bn), who happens to own huge property interests so perhaps we can expect a lot of "What housing bubble" stories from two of the nation’s most powerful newspapers.

OK, I’m done venting for the week – now let’s take a little time today to assess the situation and go out there and make some money!

"Because I’m easy come, easy go, A little high, little low,
Any way the wind blows, doesn’t really matter to me, to me" – Queen
 

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Let’s see if we can get a little somethin’-somethin’ going on the Nasdaq as our boys at AAPL plan to unveil "an exciting new digital offering." which is expected to be that they will sell unprotected music with EMI.  This may not be that exciting but Steve Coleman suggests Apple could hit $200 per share THIS YEAR and our own Happy Trading shows us that, from a technical standpoint, it may not be such a far-fetched idea:

I think it’s a bit of a stretch to add $80Bn of additional market cap to Apple in the next 9 months, but you’ve got to start somewhere if you’re going to be "the first company to achieve a market cap of one Trillion dollars," as Mr. Coleman projects.  While I am a huge Apple fan, I think the truth will lie somewhere in between but I’ll be the first in line to buy their shares on a dip!  Clearly this has been a second half play for the past 3 years anyway…