The streak is over.
After three action-packed days in markets, stocks finished Wednesday roughly unchanged and acted a lot more like what we’d seen during the S&P 500’s 43-day streak of closes inside a 1% range.
First, the scoreboard:
- Dow: 18,040, -26, (-0.1%)
- S&P 500: 2,125, -2, (-0.1%)
- Nasdaq: 5,173, +18, (+0.3%)
- WTI crude oil: $43.60, -2.8%
- 10-year Treasury: 1.7%
And now, the top stories on Wednesday:
- A big merger! The biggest M&A deal of 2016 was announced Wednesday when Bayer announced a deal to acquire Monsanto for $128 in a $66 billion deal. This deal ends several months of discussions between the two sides on a deal.
- If you’re a banker on Wall Street, $66 billion deals are good. Citing data from consultancy Freeman & Co., Bob Bryan reports that Monsanto’s advisors Morgan Stanley and Ducera could be in line to split fees of around $100-$110 million. On the Bayer side, Credit Suisse, Bank of America, and Rothschild are likely to split $70-$80 million. Ducera adds to the line of boutique investment banks that have won big business in 2016. Naturally, the deal also includes synergies.
- This might be the top. Technical analysis out of UBS published Wednesday indicates that at least for the month of September the stock market may have hit its highs. “With the Friday breakdown, we are changing our tactical bias towards a more cautious stance since we see the risk of an 8% to 10% correction into late October/early November, where we have our next bigger tactical low projection for a classic year end bounce/rally,” the firm wrote.
- It’s a been quiet week for economic data so far, with only import prices for August crossing the tape Wednesday morning. Import prices fell 0.2% compared the prior month and 2.2% over the prior year. “Net, net, the Fed is data dependent and the news today that non-fuel import prices have stopped falling comes too late in terms firming up the decisions of policymakers at next week’s meeting,” said Chris Rupkey at MUFG following the release. Thursday morning will see the release of the week’s biggest economic data point — retail sales for the month of August.
- Americans are ditching giant chain restaurants. According to data from Bank of America Merrill Lynch, restaurant spending has risen at a slower pace over the last 18 months, though spending at large chains — as opposed to smaller chains or local restaurants — has borne the brunt of this decline. “We find that sales of the big chain restaurants, which make up 18% of the aggregate, have been decidedly slower than the rest of the composite,” the firm writes. “This is indicative of a market shift away from large chain restaurants.”
- Despite what you hear in the press, labour productivity isn’t going to be terrible forever.
- Saudi Arabia might play hardball with OPEC.
- How to manage disloyal millennial employees who are just looking for their next gig (paywall).
- Matt Levine on Point.
- You can now hail a self-driving Uber in Pittsburgh.
- Minneapolis Fed president Neel Kashkari on the economy.
- What we know about Donald Trump’s health. And the latest polls.