Morning Reads
- Country Won the Global Tax Game, and Is Swimming in Money
- Yellen Says Nothing Is ‘Off the Table’ as U.S. Considers New Sanctions on Iran and Hamas
- Higher Rates May Be Needed to Curb Inflation, Fed’s Bowman Says
- Largest US Banks Grapple With Worst Write-Offs in Three Years
- KKR and Carlyle Take No Carry on New Private Credit Funds
- JPMorgan Has a Master Plan to Beat Competitors in Silicon Valley
- Even Google Insiders Are Questioning Bard AI Chatbot’s Usefulness
- U.S. Considers Dropping Sanctions Against Israeli Billionaire in Push for EV Metals
- Exxon to Buy Pioneer for $60 Billion to Dominate Shale Oil
- Fear and Anger Follow the Path of Joe Manchin’s Mountain Valley Pipeline
- Birkenstock, the German Sandal Maker, Raises $1.48 Billion in Its I.P.O.
- The Californization of the Texas Housing Market
- Biden to Announce New Actions Slashing Junk Fees
- Amazon Wants You to ‘Buy Again’
- High UAW Wages Shrink Detroit’s Room to Maneuver
- Boeing’s 737 MAX Output Falls to Lowest Level in Two Years
- Walgreens Names Veteran Health-Care Executive Tim Wentworth as Next CEO
- Claudia Goldin’s Nobel-Winning Research Shows ‘Why Women Won’
- Only Question for Taylor Swift Film: How Big Will It Be?
- Disneyland Lifts Prices Up to 9%; Florida Annual Passes Rise Too
- Caroline Ellison, Adviser to Sam Bankman-Fried, Says He ‘Directed’ Her to Commit Crimes
- Fragile Global Economy Faces New Crisis in Israel-Gaza War
- Israel War: Military Builds Forces Near Gaza as US Sends Aid
- Bank of Israel Interventions Reverse Shekel Selloff
- Bank of England to Review How It Stress Tests Banks
- China Mulls New Stimulus, Higher Deficit to Meet Growth Goal
- Country Garden Caves to Debts as China’s Real Estate Crisis Worsens
- IMF Warns of Stubborn Inflation and Weaker Global Growth in 2024
- U.S. Dysfunction Clouds Economic Diplomacy Efforts
- Worst US Bond Selloff Since 1787 Marks End of Free-Money Era
- Americans Have Saved Hundreds of Billions More Than Previously Thought
- Binance Founder’s $1 Billion Plan to Save Crypto Quietly Fizzled Out
- South Korean Chip Makers Get U.S. Waivers From China Export Rules
- General Motors Workers in Canada Walk Out After Contract Talks Fail
- Has Bob Iger Lost the Magic?
- Why Nelson Peltz Grew Impatient With Disney’s Turnaround Efforts
- Consumers Are Less Interested in Brands Taking Stances on Sociopolitical Issues, Survey Finds
Open Interest Changes
PREMIUM
Prepper
Confirming several earlier reports, Exxon Mobil (XOM) has agreed to acquire Pioneer Natural Resources (PXD) for more than $253/share, in an all-stock transaction valued at nearly $60B. For Exxon, a deal would add valuable acreage near some of its own fields and make it the dominant producer in the Permian Basin. Pioneer is the Permian's largest operator at 9% of gross production, while Exxon is no. 5 at 6% of gross production.
Backdrop: The acquisition is the second in recent months for Exxon after it scooped up Denbury Resources (DEN) for almost $5B in an all-stock deal in July. Exxon has been flush with cash since earning a record $56B in profits last year, and has set aside tens of billions of dollars for M&A. While investor and political pressure has mounted on Exxon in recent years to shift towards a more renewable energy strategy, CEO Darren Woods has stuck to a heavy oil-dependent approach, setting a 1M barrel per day target in the Permian that will easily be reached with the latest deal.
"Acquiring Pioneer would be accretive for Exxon Mobil due to the valuation difference and potential synergies," writes Jonathan Weber, explaining the financial impacts behind the deal. SA Investing Group Leader The Value Portfolio agrees, calling it A Crown Jewel For Exxon Mobil, while Leo Nelissen discussed three alternative stocks that he's buying in the wake of the transaction.
Economies of scale: The Exxon-Pioneer deal could likely jumpstart M&A in the Permian, with ConocoPhillips (COP) looking at potential deals across the shale patch. Chevron (CVX) was also interested in Occidental Petroleum (OXY), one of the largest producers in the Permian basin, in the early part of this year, though the oil giant has reportedly moved on to smaller targets. Permian producers saw gains last Friday following news of a possible Pioneer deal, including Permian Resources (PR) +4.8%, Diamondback Energy (FANG) +4.2%, Coterra Energy (CTRA) +2.6% and Devon Energy (DVN) +2%. (15 comments)
Big moves
Treasury yields continue to sink across the board as traders seek safe-haven assets amid the Israel-Hamas war, while equities drove higher as the Federal Reserve signaled that rate hikes may be over. Minneapolis Fed President Neel Kashkari called the recent jump in the 10-year Treasury yield (US10Y) "perplexing," but noted that the odds of a soft landing looked "favorable." Atlanta Fed President Raphael Bostic also doesn't expect any more rate hikes, while Fed Governor Christopher Waller stressed that the central bank would "stay on the job" to reach its inflation target. Markets now await the Fed's minutes, due this afternoon, for further clues on policymakers' views. Also on deck today is the Producer Price Index report, while the Consumer Price Index data will be out tomorrow. (11 comments)
IPO watch
Get ready for the trading debut of Birkenstock (BIRK), which has priced its IPO of nearly 32M shares at $46 per share. The footwear maker, which will raise about $1.5B, will be valued at just under $9B. L Catterton, a private equity firm backed by Bernard Arnault's LVMH (OTCPK:LVMHF), owns about 83% of Birkenstock and will retain its stake after the IPO. Birkenstock is going public amid heightened concerns over spending for consumer discretionary items, including footwear. The last significant footwear IPO was Allbirds (BIRD), whose market cap has shrunk to $143M since its stellar market debut. SA analyst David Trainer has warned traders to stay away from this IPO as Birkenstock's valuation is too high. (3 comments)
Teen spending
Piper Sandler's Taking Stock With Teens survey has pointed to initial signs of a slowdown in teenager spending, although there were some pockets of strength. Cosmetics held the highest priority of teen beauty spending, with LVMH's (OTCPK:LVMHF) Sephora shooting past Ulta Beauty (ULTA) to become the preferred beauty shopping destination, though there were other top choices. Also see what stocks tanked highest in apparel and footwear, top restaurant picks and some surprises in the food and snack sector. (9 comments)
Today's Markets
In Asia, Japan +0.6%. Hong Kong +1.3%. China +0.1%. India +0.6%.
In Europe, at midday, London +0.1%. Paris -0.5%. Frankfurt +0.1%.
Futures at 7:00, Dow +0.2%. S&P +0.2%. Nasdaq +0.3%. Crude -0.4% to $85.67. Gold +0.6% at $1,887.20. Bitcoin -1.2% to $27,282.
Ten-year Treasury Yield -10 bps to 4.56%.
Today's Economic Calendar
4:15 Fed's Bowman: "Financial Stability in Uncertain Times"
7:00 MBA Mortgage Applications
8:30 Producer Price Index
10:00 Atlanta Fed's Business Inflation Expectations
10:15 Fed's Waller's Speech
12:15 PM Fed's Bostic: “Economic Conditions”
1:00 PM Results of $35B, 10-Year Note Auction
2:00 PM FOMC Minutes
4:30 PM Fed's Collins: "Reflections on Policymaking Amidst (Pandemic) Uncertainty"
Companies reporting earnings today »
What else is happening...
Bank of England warns on U.S. tech stocks' stretched valuations.
Kashkari: Jump in 10-year Treasury yield (US10Y) a bit 'perplexing.'
Biden admin to award $7B in funds for hydrogen hubs this week.
HP (HPQ) raises annual dividend by 5%, provides FY24 guidance.
Oil prices pull back a bit on reduced fears of supply disruptions.
Blackstone (BX) eyes stake in Disney's (DIS) India business.
PepsiCo (PEP) stock gains after organic sales shine in Q3.
Walgreens (WBA) names ex-Cigna (CI) executive as new CEO.
Samsung (OTCPK:SSNLF) sees 78% drop in Q3 operating profit.
American Airlines (AAL) halts flights to Israel through early Dec.
Las Vegas Strip will have a new mega resort opening soon.