Thousands Of Layoffs Coming After Buffett Merges Heinz With Kraft, Creating 5th Largest Food Company In The WorldSubmitted by Tyler Durden on 03/25/2015 06:37 -0400
Another day, another mega-M&A deal taking advantage of abnormally low bond rates, this time however not involving biotechs or a specialty pharma seeking to purchase a debt-free balance sheet, but one involving the Oracle of Omaha himself, and his Heinz investment, which will merge with Kraft Foods whose market cap was over $40 billion this morning on the news of the merger, and create the third largest food and beverage company in the US, and 5th largest in the world. And while the resulting company will certainly be a food giant, here is the rationale behind the deal and the punchline for American workers: "significant synergy opportunities." Translation: thousands of layoffs imminent.
Janet Yellen noted that everything was awesome and that stocks were now slightly "on the high side" of their historical range. It appears no one showed her the Russell 2000 which has a valuation multiple of just about 90x LTM earnings (as reported by the 2000 companies which comprise the index, and which were certified as accurate by 4,000 CEOs and CFOs on penalty of jail time). The mystery of how the Fed remains so stubbornly bubble blind - just like it did during the dotcom and housing bubbles - is thus revealed. The self-evident reason is that the purported geniuses who comprise our monetary politburo drink the Wall Street Cool-Aid about forward ex-items EPS. The Fed is driving a two-ton bubble machine, but has no clue that it has become a financial death trap.
Our views on some of the popular oil-market related topics including Saudi, 'Fracklog', E&P Funding Crisis, Dividend Cut by XOM? and final thought on Merit of the Integrated Model
Gilead is, by far, the largest income producer in the Nasdaq Biotech Index and today's warning from the Biotech behemoth which has dragged the stock down 2.8% this morning, is weighing heavily on the exponentially-expanding index. As Bloomberg reports, GILD said nine patients taking its hepatitis C drugs Harvoni or Sovaldi along with the heart treatment amiodarone developed abnormally slow heartbeats and one died of cardiac arrest. Now, of course, it's "just" 9 patients... so analysts will spin the diversification. The Nasdaq Biotech Index now trades with a P/E of 50x, with over 80% of the entire sector's earnings concentrated in just 5 companies... and the biggest of all just warned on the drugs that make up half its revenues!
Adding across the entire Nasdaq Bitoech Index, the market cap is about $1.06 trillion. As for net income: $21.1 billion. In other words, the NBI now trades with a P/E of 50x, with over 80% of the entire sectort's earnings concentrated in just 5 companies.
The only asset class that made any sense in today's quad-witching was the 10 Year, whose yield did precisely what it should do in a world in which the Fed slashed the economic outlook 2 days ago: it tumbled. Everything else was just algorithmic momentum ignition, stop hunts, and the other usual quad witching thriller which we said would happen first thing this morning.
Quad-witching days are volatile on normal days, so in an environment of virtually zero liquidity, in which the market careens from one extreme to another simply based on whether the Fed utters one single word, in which volatility across asset classes is soaring, and in which it is all about igniting algo momentum, today's quadruple withicng should be memorable, which is good since there is virtually no macro data today to speak of.
The only market year to date that has shown truly impressive gains in both local currency and USD terms, is also the best performing market of 2014 - China, which is now up almost 100% in less than a year! Here, courtesy of UBS, is the complete list of what may be causing China's relentless stock market surge.
A wicked web of deceit, with just a good measure of theft and forgery thrown in for old time’s sake!
We thought private tech company valuations looked ridiculous, but as the VC world will patiently explain to you, things like cash flow and operating costs actually don't matter, and "valuation" doesn't mean what you thought it meant.
Active managers, stinging from the proliferation of passive indexing, are utilizing robots to transform active strategies into "passive" ones, capturing 20% of the US ETF market in the process.