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Bayer made a $62 billion bid for Monsanto. The German drugs and chemicals group offered to buy the American seeds company for $122 per share in cash, in a deal worth $62 billion including debt. Monsanto had said last week that Bayer made an unsolicited offer, which was rebuffed by investors. A merger would create the world’s largest agricultural supplier. It would also represent a milestone in a year that has been sluggish for mergers and acquisitions following early market volatility. Bayer sees annual synergies to earnings of around $1.5 billion after three years. Its shares fell 3% in Frankfurt trading; Monsanto jumped 9% pre-market in New York.
The Federal Reserve continues to prep markets for a possible rate hike in June. Boston Fed president Eric Rosengren told the FT that the conditions for another rate hike are “on the verge of broadly being met.” Last week, several FOMC members spoke in favour of an interest-rate hike at their meeting next month if key economic data continue to be strong. On Wednesday, minutes of the Fed’s April meeting showed there was some disagreement among members, as expected, but that a June hike is clearly on the cards.
The strong yen is crushing Japan’s exports. Goods sold abroad fell 10.1% in April, more than the Bloomberg estimate for -9.9%, as imports slumped 23.3%. That left a trade surplus of 823.5 billion yen ($7.5 billion), the largest since March 2010, the Ministry of Finance said. The yen’s appreciation this year, by as much as 9% versus the dollar, has made Japanese goods less attractive to overseas buyers using other currencies. Separately, a preliminary survey showed Japanese manufacturing activity shrank at the fastest pace in over three years amid a drop in new orders. The Markit/Nikkei Flash Japan Manufacturing Purchasing Managers Index (PMI) fell to 47.6 in May on a seasonally adjusted basis, from a final 48.2 in April.
European PMIs were slightly lower than expected in May. Preliminary figures from Markit’s Purchasing Manager’s Index showed that European industry expanded marginally less than expected in the month, with a composite reading of 52.9, down from 53 in April, and lower than the 53.2 forecast. Activity in Europe’s service sector was flat at 53.1. PMIs are given as a number between 0 and 100. Anything above 50 signals growth, while anything below means contraction.
Tribune Publishing will reportedly reject Gannett’s latest $864 million takeover offer. People familiar with the matter told Reuters that Tribune will share some confidential corporate information with Gannett under a non-disclosure agreement. This paves a way for both companies to negotiate after a bitter dispute.
Anthem and Cigna are quarreling and could delay their merger. The Wall Street Journal reported that disagreements could delay antitrust approvals, which would make the $48 billion-deal possible. The report said both health insurers accused each other of violating the terms of their agreement announced last July. Cigna CEO David Cordani and Anthem CEO Joseph Swedish have disagreed in the last few months, particularly over Cordani’s role in the new company. A deal would create America’s largest health insurer by members.
Polls show the gap between Hillary Clinton and Donald Trump narrowing. A Washington Post-ABC News poll released over the weekend showed the presumptive Republican nominee had gained 11 points since March, giving him a 46%-44% lead. In an NBC News/Wall Street Journal poll, 54% viewed Clinton unfavorably, versus 58% for Trump. Both polls were within the margin of error, implying that it’s really neck-and-neck.
“Angry Birds” dominated the weekend Box Office. The Sony-distributed adaptation of the wildly popular smartphone game raked in $39 million at its debut in the US and Canada, while “Captain America: Civil War” earned $33.1 million for its third straight weekend in second place according to Bloomberg. “Angry Birds'” success should support Rovio Entertainment, the game’s maker, which has trimmed jobs amid slow merchandise sales.
Futures are pointing to a red open on Wall Street. Dow futures fell 34 points, or 0.19%. Treasurys gained, and the yield on the 10-year note fell three basis points to 1.821%. West Texas Intermediate crude futures for July delivery slipped 1.2% to $47.82 per barrel.
The data calendar is light. San Francisco Fed president John Williams speaks at 8 a.m. ET. Markit’s preliminary manufacturing PMI for May is due at 9:45 a.m. ET. A ton of housing data and the second estimate of first-quarter GDP will be released later this week; you can check out our full preview here.