Here is what you need to know.
Warren Buffett is making his biggest acquisition ever. Berkshire Hathaway is buying Precision Castparts for $US235 per share in cash in a mega-deal worth about $US37.2 billion. Berkshire originally began investing in Precision Castparts in 2012 and had already amassed a 3% stake before Monday’s announcement. On Friday, Precision Castparts closed at $US193.94, meaning Berkshire is paying a 21% premium to own the company.
Berkshire Hathaway disappointed. The conglomerate announced earnings of $US2,637 per share, missing the $US3,038 that analysts were anticipating. Revenue for the second quarter came in at $US54 billion.
Twitter is considering a board shakeup. The New York Times and Re/Code report former CEO Dick Costelo will leave the company’s board of directors when a new CEO is announced. According to Bloomberg, Twitter is looking to diversify its board with people of different ethnicities and backgrounds. Co-founder Jack Dorsey is currently the company’s interim CEO.
Alibaba is investing in brick and mortar. The e-commerce giant announced it’s taking a 19.9% stake in brick and mortar retailer Suning Commerce Group with an investment of more than 28 billion yuan ($US4.63 billion). “Under the partnership, Suning will open a flagship store selling consumer electronics, home appliances and baby products on Alibaba’s brand-focused Tmall.com platform, the statement said. They will also cooperate in logistics,” the Wall Street Journal reports.
HTC is basically worthless. The Taiwanese smartphone maker’s market cap slid below the NT$47.2 billion ($US1.5 billion) worth of cash on its books, meaning investors see no value in the brand or its assets. At one point, the company was the best selling smartphone brand in the United States. Sales have fallen more than 75% over the past four years.
China’s consumer prices quickened. CPI rose to up 1.6% year-over-year in July, ticking higher from the up 1.4% in June and outpacing the up 1.5% that economists were forecasting. The hotter than expected data was fuelled by surging pork prices. Meanwhile, producer prices continued to fall. PPI plunged to down 5.4% YoY, worse than the down 5.0% that was expected. The Chinese yuan was unchanged at 6.2097 per dollar.
Japan’s current account surplus narrowed. The June current account surplus shrank to 558.6 billion yen ($US4.5 billion), missing the 773.6 billion yen that analysts were anticipating. According to Reuters, “The gain was driven by a rising primary income surplus, which measures profits from investment abroad, and a gain in the travel account due primarily to growth in tourist numbers on the back of the weak yen.” The country’s first-half surplus of 8.18 trillion yen was its largest since the second half of 2010. The Japanese yen is weaker by 0.4% at 124.76 per dollar.
Stock markets around the world are mostly higher. China’s Shanghai Composite (+4.9%) rallied sharply to lead Asia higher and Spain’s IBEX (+0.9%) paces the gains in Europe. S&P 500 futures are up 7.00 points at 2080.50.
Economic data is absent. Data begins to flow for the week on Tuesday with productivity, unit labour costs and wholesale inventories. The US 10-year yield is higher by 3 basis points at 2.19%.
Earnings reports continue to flow. AES, CenterPoint, Dean Foods and Sysco are among the names scheduled to report ahead of the opening bell. Kraft Heinz, Live Nation and Shake Shack highlight the companies set to release their quarterly results after markets close.