Monday, March 9, 2015

Markets advance on acquisition news

Dow shot up 138, advancers over decliners a modest 5-4 & NAZ gained 15.  The MLP index dropped 7+ to 429s & the REIT index went up 3 to the 326s.  Junk bond funds were little changed & Treasuries advanced.  Oil climbed over 50, although has been flattish near 50 for weeks, & gold crawled higher from it depths in the 1100s.

AMJ (Alerian MLP Index tracking fund)

CLJ15.NYM....Crude Oil Apr 15....50.09 Up ...0.48 (1.0%)

Live 24 hours gold chart [Kitco Inc.]

Apple released details about its first smartwatch, the Apple Watch, in San Francisco today.  The watch will be available to consumers on Apr 24, “in many countries throughout the world.”  The Apple Watch pricing begins at $349, for the Sports edition, which is made of aluminum.  The standard Apple Watch, which is made of stainless steel, begins at $549.  The Apple Watch Edition, made of gold, will begin at $10K.   Recapping some of its already known features, CEO Tim Cook touted the customizable screens, the messaging capabilities, Apple Pay compatibility, Siri & health tracking.  Apple Watch “reminds you if you’ve been sitting too long,” serving as a “comprehensive health and fitness companion,” Cook said.  The watch vibrates when a text message is received & users can respond via voice.  A built-in speaker & microphone also allows users to receive calls on their watch. The new revelations came from the introduction of apps, including W Hotels, which allows users to unlock their hotel room from their Apple Watch.  The presentation also showcased the way that users with smart homes can unlock their door or open up their garage door remotely.  Apple Watch will have an 18-hour battery life, significantly shorter than competitors like Pebble.  This is the first significant new product category for AAPL, since the iPad was release 5 years ago.  The stock rose all of 54¢.  If you would like to learn more about AAPL, click on this link:

Apple Springs Forward With 'Revolutionary' Watch

Apple (AAPL)

Simon Property offered to buy rival Macerich (MAC) for $14.4B in cash in a deal that would join the #1 & #3 US shopping mall owners.  Mall operators in the US have been experiencing a fall in traffic as consumers take to shopping online, which more convenient & often cheaper.  The enterprise value of the deal is $22.4B, including $6.4B in debt.  The offer, at a premium of 4.9% to Fri close of MAC, will be 50% in cash & 50% in SPG common stock.  "Considering the substantial benefits our offer provides, we are confident that, given the opportunity, Macerich's shareholders would accept our proposal," SPG CEO David Simon said.  MAC rose $6 while SPG lost pocket change.  If you would like to learn more about SPG, click on this link:

Simon Offers $22.4B Cash and Stock for Macerich

Simon Property (SPG)

General Motors will launch a new, $5B share buyback, & put forward a more detailed plan for capital allocation that promises investors the potential for further cash returns.  It had reached a deal with an investor group that averts a proxy fight over its balance sheet & governance.  As part of the agreement, investor Harry Wilson will drop his effort to get a seat on GM's board.  GM also confirmed it will boost its quarterly div to 36¢ from 30¢ previously (after disclosing plans to raise its div last month).  In all, the actions should return about $10B to shareholders thru 2016.  GM has built up $25B in cash as its sales & profits rebounded following its 2009 gov-led bankruptcy.  But from now on, GM said it would aim to keep $20B in cash on its balance sheet & return free cash flow beyond that to shareholders.  The framework depends on GM maintaining an investment grade balance sheet.  GM CFO Chuck Stevens said $20B should be enough to allow the automaker to manage thru a recession, & he said GM would try to work that minimum cash level down over time.  GM rose 1.12.  If you would like to learn more about GM, click on this link:

GM Plans $5B Buyback, Makes Deal to Avert Proxy Fight

General Motors (GM)

The new Apple Watch was sort of the highlight today.  It was greeted with yawns.  The product is so high priced that even the most loyal fans will have to think twice before buying the new watches.  6 years ago Dow reached its recession lows & since then has advanced almost 11½K.  That's staggering.  It must be remembered that low interest rates from the Fed along the way have been a key driver for stock buying.  While it made stock investors very happy, such an advance can not be replicated.

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