Traders Market Weekly: Disconnect of World at War and Stock Market Euphoria

Viewing 15 posts - 1 through 15 (of 67 total)
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  • #71762
    MoneyNeverSleeps
    Participant

    iRobot tumbles after $1.4B sale to Amazon terminated; iRobot CEO exits

    iRobot (NASDAQ:IRBT) sunk 20% in premarket trading after Amazon (NASDAQ:AMZN) and the robot vacuum maker mutually agreed to terminate the planned $1.4 billion sale to Amazon. iRobot’s CEO is also leaving and company will cut 31% of its workforce.

    IRBT iRobot Corporation Pre-Market: $13.83 -3.16 (-18.60%) 9:06 AM
    AMZN Amazon.com, Inc. Pre-Market: $159.81 +0.69 (+0.43%) 9:06 AM

    iRobot (IRBT) also said it will cut about 350 employees, which represents 31 percent of the company’s workforce, according to a statement on Monday.

    Under the terms of the merger agreement, Amazon will pay iRobot a $94 million termination fee. Amazon shares ticked up 0.3% in premarket trading.

    Colin Angle, Chairman of the Board of Directors and CEO of iRobot (IRBT) has stepped down as Chairman and CEO. Glen Weinstein, iRobot’s Executive Vice President and Chief Legal Officer, has been appointed Interim CEO.

    The deal termination comes as Amazon (AMZN) and the maker of the Roomba robot vacuum struggled to gain approval from regulator authorities, specifically in the U.S. and Europe.

    Media reports earlier this month indicated that the European Union was expected to block the deal and Bloomberg reported that the Federal Trade Commission was drafting a lawsuit that would seek to stop the iRobot (IRBT) deal.

    “Undue and disproportionate regulatory hurdles discourage entrepreneurs, who should be able to see acquisition as one path to success, and that hurts both consumers and competition—the very things that regulators say they’re trying to protect,” David Zapolsky, Amazon SVP and General Counsel, said in a separate statement on Monday.

    There’s been concern for months that iRobot’s (IRBT) downside in a terminated deal could be very meaningful, according to traders. An informal poll done by Bloomberg in late November among a half-dozen merger arbitrage specialists saw downside to $5 to $12 a share in an aborted deal.

    iRobot (IRBT) said its initiating a restructuring plan and wants to achieve $80-$100 million in savings on equivalent volumes through the execution of agreements with joint design and contract manufacturing partners on more attractive terms. iRobot is looking to reduce R&D expense by approximately $20 million year-over-year through increased offshoring of non-core engineering functions to lower-cost regions.

    iRobot (IRBT) also said it expects to rightsize its real estate footprint through additional subleasing at its corporate headquarters and the elimination of offices and facilities in smaller, underperforming geographies,

    #71763
    MoneyNeverSleeps
    Participant

    U.S. Treasuries are on track for a higher start after last week’s divergence that saw modest strength in shorter tenors and relative weakness on the long end.

    European Central Bank policymaker Villeroy de Galhau said that the ECB could cut rates at any time while policymaker Centeno said that cuts should start sooner rather than later.

    In the U.S., the Wall Street Journal reported that the FOMC will not cut rates at this week’s meeting but will remove a reference to rates being more likely to rise than fall from its policy statement.

    Crude oil is holding just above its 200-day moving average (77.66) while the U.S. Dollar Index is up 0.1% at 103.55.

    Yields
    2-yr: -2 bps to 4.34%
    3-yr: -4 bps to 4.13%
    5-yr: -4 bps to 4.02%
    10-yr: -5 bps to 4.11%
    30-yr: -4 bps to 4.35%

    #71773
    Truman
    Participant

    Equity indices in the Asia-Pacific region began the week on a mostly higher note with China’s Shanghai Composite (-0.9%) facing some renewed weakness.

    Japan’s Nikkei: +0.8%,
    Hong Kong’s Hang Seng: +0.8%,
    China’s Shanghai Composite: -0.9%,
    India’s Sensex: +1.8%,
    South Korea’s Kospi: +0.9%,
    Australia’s ASX All Ordinaries: +0.3%.

    Hong Kong’s High Court ordered a liquidation of developer Evergrande, though there is speculation that the company will continue working on unfinished projects in China.

    #71774
    Truman
    Participant

    China
    December Industrial Profit -2.3% YTD (last -4.4%)
    Hong Kong’s High Court ordered a liquidation of developer Evergrande, though there is speculation that the company will continue working on unfinished projects in China.
    China Sovereign Wealth Fund will be merged with three bad banks, according to Xinhua.

    #71775
    Truman
    Participant

    New Zealand
    December trade deficit NZD323 mln (expected deficit of NZD975 mln; last deficit of NZD1.25 bln)

    #71776
    Truman
    Participant

    Singapore Monetary Authority made no policy changes.

    #71777
    Truman
    Participant

    Major European indices trade in mixed fashion.
    STOXX Europe 600: +0.1%,
    Germany’s DAX: -0.5%,
    U.K.’s FTSE 100: +0.1%,
    France’s CAC 40: UNCH,
    Italy’s FTSE MIB: -0.8%,
    Spain’s IBEX 35: -0.4%.

    Discount carrier Ryanair lowered its profit guidance for the year due to higher fuel and staff costs.

    #71778
    Truman
    Participant

    Italy
    December non-EU trade surplus EUR8.34 bln (last surplus of EUR6.27 bln)
    sts.

    #71779
    Truman
    Participant

    European Central Bank policymaker Villeroy de Galhau said that the ECB could cut rates at any time while policymaker Centeno said that cuts should start sooner rather than later.

    #71780
    Truman
    Participant

    Colgate-Palmolive (CL 83.38, +0.55, +0.7%): upgraded to Outperform from Market Perform at Raymond Hames
    Norfolk Southern (NSC 231.00, -3.26, -1.4%): downgraded to Underweight from Equal Weight at Morgan Stanley
    Dollar Tree (DLTR 135.50, +2.77, +2.1%): upgraded to Overweight from Neutral at JPMorgan Chase
    American Airlines (AAL 15.33, +0.20, +1.3%): upgraded to Buy from Neutral at Citi Group
    Warner Bros Discovery (WBD 10.48, -0.14, -1.3%): downgraded to Equal Weight from Overweight at Wells Fargo

    #71781
    Truman
    Participant

    TKO Group (TKO 84.75, -1.79, -2.1%): Vince McMahon resigns as Chairman of TKO Group (TKO), according to CNBC

    #71782
    Truman
    Participant

    Lockheed Martin (LMT 431.98, +2.07, +0.5%): aims to eliminate 1% of jobs, according to Reuters

    #71783
    Truman
    Participant

    Tesla (TSLA 185.35, +2.10, +1.2%): CEO Elon Musk says he plans to purchase chips for AMD (AMD); discloses that expects its expenditures to exceed $10.00 billion in 2024 and be between $8.00 to $10.00 billion in each of the following two fiscal years

    #71785
    Truman
    Participant

    Philips (PHG 21.16, -1.60, -7.0%): misses by EUR0.13, misses on revs
    SoFi Technologies (SOFI 8.36, +0.74, +9.7%): beats by $0.02, beats on revs; guides FY24 EPS above consensus

    #71786
    Truman
    Participant

    S&P 500 futures are up two points and are trading 0.03% above fair value,
    Nasdaq 100 futures are up 30 points and are trading 0.2% above fair value,
    Dow Jones Industrial Average futures are down 19 points and are trading 0.1% below fair value.

    Pre-open gains in some mega cap names has supported the broader market ahead of a busy week, including earnings results from Alphabet (GOOG) and Microsoft (MSFT) after Tuesday’s close, and Amazon.com (AMZN), Meta Platforms (META), and Apple (AAPL) after Thursday’s close.

    10-yr note yield is down five basis points from Friday at 4.11%
    2-yr note yield is down three basis points to 4.33%.

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