Market Snapshot
Asia: Japan +0.2% to 19746. Hong Kong +0.5% to 24528. China -0.8% to 3661. India -0.2% to 28112.
Europe: London flat. Paris -0.5%. Frankfurt -0.3%.
Futures: Dow +0.1%. S&P +0.1%. Nasdaq +0.2%. Crude flat at $47.53. Gold flat at $1191.70.
Ten-year Treasury Yield -4 bps to 1.88%
Economic News
7:00 MBA Mortgage Applications
8:30 Durable Goods
10:30 Petroleum Inventories
Key earnings before the open
APOL, DXLG, FRAN, LDOS, LNN, PAYX, YGE
Key earning after the close
FIVE, FNV, FUL, OTIV, PSUN, PVH, RHT, TGB, VRNT, WOR
Markets
U.S. stocks opened little-changed on Wednesday, as investors assessed weaker-than-expected durable-goods orders and focused on the merger between Kraft and Heinz. Trading volumes were lower than usual.
Oil dipped overnight as more evidence emerged that China’s strategic reserves could nearly be full and ballooning U.S. storage volumes pressured prices.
Unless it secures fresh aid, Greece risks running out of cash by April 20, leaving it little time to work out a deal with its EU creditors. Earlier this week, Greek PM Alexis Tsipras discussed reforms with Germany’s Angela Merkel and promised to present a detailed list of proposed overhauls by Monday, but new pressures are popping up. Yesterday, the ECB instructed Greece’s largest banks to refrain from increasing their exposure to Greek government debt, posing a severe challenge to the nation’s government.
Stocks
H.J. Heinz and Kraft (KRFT) have entered into a definitive merger agreement to create The Kraft Heinz Company, forming the third largest food and beverage company in North America. Heinz shareholders will own a 51% stake in the combined company, while Kraft shareholders will hold a 49% stake and receive a special cash dividend of $16.50 per share. Together the new company will have eight $1B+ brands and five brands between $500M-$1B.
An increasing supply outlook weighed on chicken stocks yesterday, with Pilgrim’s Pride’s (PPC) 8% decline leading the group, and Tyson Foods (TSN) and Sanderson Farms (SAFM) and each sliding about 3%. The companies came under pressure from U.S. Department of Agriculture data that showed leading chicken breeders in February increasing the number of young hens they placed for future supply flocks by 9% from a year earlier.
Royal Caribbean (RCL) makes plans to add a fifth ship to its Chinese fleet. After the U.S. and Europe, China is now Royal Caribbean’s third-largest market by revenue, a swift move up from No. 50 just five years ago. In the next decade, the company expects the China’s cruise industry to match that of the U.S., where Royal Caribbean carries more than 2M passengers each year.
Countering the bids of several liquidators, Standard General has increased its offer for 1,740 stores of bankrupt electronics retailer RadioShack (OTCPK:RSHCQ), raising its original $145M bid by at least $20M with a promise to keep 7,500 jobs. According to sources, the auction is being complicated by disputes among creditors over how the hedge fund would pay for its bid. Much of Standard’s offer is taking the form a “credit bid,” or a pledge to forgive some of what it is owed.
After returning $13B in cash last year, Merck (NYSE:MRK) has upped its buyback authorization by $10B to $11.7B. That’s good for repurchasing 7% of shares at current levels.
The inventory backlog of shares created by Whiting Petroleum’s (WLL) new public offering will take weeks to unload, according to a NYSE floor trader. Whiting plunged 20% yesterday on disappointment that its rumored sale is almost certainly dead in the wake of plans to raise $3.2B in a stock offering and sale of notes.
Lexmark has agreed to buy Kofax for about $1B, in a deal that would double the size of its enterprise software business. Following the announcement, Kofax (KFX) shares soared on the news , just shy of Lexmark’s (LXK) $11 per share cash offer. Lexmark is up 6.7%.
Airbus is again cutting its stake in Dassault Aviation (DUAVF), dropping its holdings to around 27% from 42%, as it continues its plan to sell its full stake in the fighter jet maker by the end of 2015.
The cockpit voice recorder for the Germanwings (DLAKY) flight that slammed into the French Alps yesterday has been found, although a search for the second black box, the flight data recorder, is still ongoing. The same model airplane, the Airbus (EADSY) A320, crashed into the Java sea off the coast of Indonesia just under three months ago (AirAsia Flight 8501).
In the five years after the financial crisis, CEOs at large U.S. companies collectively realized at least $6B more in compensation than initially estimated in annual disclosures, a recent analysis shows. The reason for the windfall: the soaring value of their stock awards. The S&P 500’s total return of 166% – from the end of 2008 through Monday – has some investors re-evaluating how they judge compensation plans. In some cases, they say CEOs may be benefiting from the bull market even when their performance might be weak.