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T3’s Take 3: Bad News Banks Beat Merger Mania!
Want to Learn to Trade With Our Experts? Check Out These 2 FREE Events: Start Prop Trading the Right Way How to Generate Big Income With Options 1) M&A Fever Today was a good day for Wall Street dealmakers as 2 sizeable deals were announced, with another Twitter (TWTR) takeover rumor serving as the icing on top. Privately-held outdoors retailer Bass Prop Shops is buying Cabela’s (CAB) for $5.5 billion. The combined company will have nearly 200 stores in the United States. Legendary bond investor Bill Gross also has a new employer, as his company Janus Capital (JNS) will be acquired by UK-based asset manager Henderson Group Plc. Meanwhile, Bloomberg reported that Google (GOOGL) may be kicking the tires on Twitter (TWTR) regarding a possible link-up. In recent weeks, Twitter shares have skyrocketed on reports that it could be acquired by companies including Salesforce.com (CRM), Microsoft (MSFT), and even Disney (DIS). Twitter shares rose 4.0% to $23.97 today. 2) US Stocks Pull Back The S&P 500 pulled back -0.3% as the banking industry came under fire again. European banks fell today after Deutsche Bank (DB) failed to announced a smaller settlement with the Department of Justice, which handed the bank a $14 billion tab over its mortgage backed securities practices. Well Fargo (WFC) continued its downtrend on a pile of negative news, including a loss of business with the state of Illinois. Democratic Presidential candidate Hillary Clinton also attacked the bank in a speech in Toledo, Ohio. Massachusetts Secretary of the Commonwealth William Galvin accused a Morgan Stanley (MS) unit of “dishonest and unethical conduct” in in state dealings. The S&P Financial ETF (XLF) fell -0.5% today. Gold miners, utilities, and real estate stocks all fell on stronger-than-expected US economic data, which pushed up the dollar and interest rates. The Nasdaq slightly outperformed today as select names like Netflix (NFLX) and Tesla (TSLA) staged strong rallies. 3) Rule of 4 Sell Signal? This afternoon, my good friend Jeff Cooper once again keyed on the widely-watched 2148 level in the SPX. Here’s what he had to say: The Daily Swing Chart has turned right back down as the SPX trades below Friday’s low this morning. There is a 3 point rising trend line on the hourlies that now ties to around the key 2148 level. So if this is breached, it will trigger an hourly Rule of 4 sell from September’s pennant to kick off October, a potentially poor harbinger for the what is often a wicked month. Tuesday’s Trading Calendar US Economics (Time Zone: EDT) 08:05 Fed’s Lacker Speaks at West Virginia Economic Outlook Meeting 09:45 ISM New York (Sep): prior 47.5 19:50 Fed’s Evans Speaks on Economy and Policy in Auckland, NZ Global Economics 03:00 EUR Spanish Unemployment Change 04:30 GBP Construction PMI 20:30 AUD Retail Sales m/m Earnings Before Open: Darden Restaurants Inc (DRI) After Close: None of significance
Continue Reading -->The Morning Hammer: The Deutsche Bounce
Deutsche Bank (DB) is bouncing this morning after agreeing to sell its UK insurance unit. But more importantly, CEO John Cryan said the bank will not require a capital raise. DB is facing a $14 billion bill from the US Department of Justice, which has raised fears about liquidity problems. But for now, traders are taking the worst-case scenario off the table, which is helping European stocks. The DAX is up 1.0% with German banks up 1.4%. ECB President Mario Draghi is expected to speak to reporters around 4:00 p.m., and he’s likely to comment on monetary policy and the European economy. Crude oil is turning higher today after Saudi Arabia may compromise with Iran on a future supply agreement. OPEC is meeting in Algiers so odds are we’ll see fresh oil headlines in the near future. Nike (NKE) beat on earnings but reported weak future orders and missed on gross margins. Odds are this is a competitive issue rather than an economic one, since Adidas beat and UnderArmour (UA) is also coming on strong. We could be in for a big 3 days. Traders are split 50-50 as to whether the Fed moves in December. We’ve seen a big slide down in US economic data strength since late June, and we’ve got some big numbers coming out through the end of the week: Today: Durable Goods, plus Fed Chair Yellen testifies before a House Panel Thursday: GDP, Pending Home Sales Friday: Personal Income/Spending, PCE Deflator, Chicago PMI Now if we see a string of misses, we could see big rips in gold and US Treasuries, because traders may assume the Fed will have to continue to back off. But keep in mind that the converse is true: if we see some big beats, maybe traders will seriously buy into rate hikes. Again, the market is split 50-50 on December. So while the talking heads insist the Fed is hawkish, the market is not exactly full of true believers. SPX futures are basically flat… hopefully not for long.
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