Weekly market review: 28/03-01/04

The S&P 500 had a 0.1% gain this week, cooling off from a strong start to the week. The market was driven by the geopolitics. The market started strongly at the start of the week partly because the peace talk between Russia and Ukraine looked promising. The market retraced those gains over the next couple of days, though, as Russia refuted progress in talks with Ukraine. Oil prices fell 12.6%, or $14.29, to $99.54/bbl after the U.S. and other nations said they will release oil from their strategic reserves to help alleviate gas prices. The U.S. plans to release one million barrels per day for the next six months.

Weekly market review: 14/03-18/03

This was a great week for the stock market. S&P 500 increased by 6.2%, one of the best weeks for two years. This website (https://www.briefing.com/weekly-wrap ) argue that this was due to several factors including • Oil prices losing 5.6% • Fed Chair Powell saying the probability of a recession within the next year is low • Early reports indicating progress in ceasefire talks between Russia and Ukraine • China vowing support for its economy and markets

The next recession

A nice podcast from Economist magazine about the next recession Money Talks: The next financial crisis

Financial News 17/02/2022

 Google’ stock split. The current stock price of Google is over $2000. As argued by the article, "the split will make the stock more affordable and potentially eligible for inclusion in more market indexes."

https://www.reuters.com/technology/google-parent-alphabet-beats-revenue-estimates-online-ad-strength-2022-02-01/

 

Inflation surges 7.5% on an annual basis, even more than expected and highest since 1982. 

https://www.cnbc.com/2022/02/10/january-2022-cpi-inflation-rises-7point5percent-over-the-past-year-even-more-than-expected.html

Last week’s financial market review by Edward Jones.

https://www.edwardjones.com/us-en/market-news-insights/stock-market-news/stock-market-weekly-update

Deal Season Returns

Deal season returns. Several large M&A deals currently attract a lot attention, and they will shape the world. The first is Salesforce, one of top five software companies in the world, will buy Slack, the firm creating a popular collaboration software. The deal value can be $27 billion, one of the largest tech acquisitions in recent years.

The second deal is the Bertelsmann’s acquisition of Simon & Schuster, the fifth-biggest English-language book publisher by revenues, from ViacomCBS, for $2.2bn. Because Bertelsmann is the parent of Penguin Random House, the largest publisher by a big margin, the deal will increase the concentration of the industry.

The News Corp, Rupert Murdoch’s media group and the owner of HarperCollins (the third largest publisher), joined the bid but failed.

ViacomCBS sold Simon & Schuster because it wants to focus on it streaming service, Paramount+.

BTW, currently, the second largest publisher is Hachette Livre, owned by Lagardère, an ailing French conglomerate. (Vivendi, a French group that is Lagardère’s biggest shareholder, also briefly vied for Simon & Schuster.)

The last one is the S&P Global, a big financial data firm, pays  $44bn for its rival IHS Markit. Don’t forget that Last year the London Stock Exchange (LSE) agreed to buy Refinitiv, the former financial-data service of Thomson Reuters, for $27bn.

You can listen to the podcast below from Economist.com to get to know more about those deals.

https://www.economist.com/podcasts/2020/12/01/joes-dream-team-joe-bidens-latest-nominations-and-his-economic-game-plan 

The Oil prices and stock prices

The drop of oil prices in the past several years was one of the most important economic events. Since the start of 2016, oil prices have swung between $27 and $42 per barrel, about a quarter of the 2008 peak crude oil price of $145.

Oil prices also have a big and somewhat surprising impact on stock prices. There is a nice article about this at Business Week magazine.

"Oil Is the Cheap Date From Hell"

Wherever oil goes, the stock market goes. This relationship has got to end. 

http://www.bloomberg.com/news/articles/2016-02-11/oil-is-the-cheap-date-from-hell

http://www.bloomberg.com/news/videos/2016-02-11/why-oil-is-the-cheap-date-from-hell

Why Apple is selling Swiss franc bonds

Apple is issuing bonds in Swiss franc. There is an article about it (http://www.cnbc.com/id/102413855  ).

Why cash rich Apple issued bond? The article here (http://www.forbes.com/sites/spleverage/2013/04/30/debt-averse-apple-sets-6-part-bond-deal-to-establish-funding-yield-curve/  ) explains that Apple can save two types of tax:

 “This has meant that the company’s total capital return program has increased to about $130 billion, and the company may need more cash to fund the program given that a bulk of its cash reserves are located overseas. Over 85% of of Apple’s cash reserves are held with its overseas subsidiaries, and the company would face repatriation taxes if it were to bring the funds back to the United States, which would be very tax-inefficient. The company has been steadily increasing its debt load to fund its shareholder returns. Raising debt to repurchase shares is also attractive from a cash flow perspective, since the company’s borrowing costs (for the European issue) are lower than its trailing dividend yield, which stands at over 1.7%. Additionally, since interest payments are tax deductible, the company would be able to potentially lower its tax burden.”