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China roars again, and two mega-mergers help cap Wall Street's downside

John Phillips | CNBC

The dragon is roaring again! China's Shanghai Index rallied another 2.4 percent overnight; the market is in the midst of a 4-day upswing that has seen the index rise 6 percent to close at the highest levels this year.

Chinese economic data have been improving recently, fueling the rally and spilling over into Hong Kong's market. The Hang Seng is now at the highest level since 2011.

Elsewhere

1) Taking out the competition. That's what happened today in two deals: one in real estate, the other in retail:

a) A real estate mega-deal is in the making with Zillow buying Trulia. Trulia shareholders will get .44 shares of Zillow stock. That translates into a share price of $69.96, roughly 25 percent above Friday close. Trulia shareholders will own about 33 percent of the combined company.

What's interesting is how powerful the combined entity would be: the online competition appears to be fairly minimal. True, realtor.com (the official site of the National Association of Realtors, operated by MOVE) is out there, but little else.

Twenty years ago, when I was the Real Estate Correspondent for CNBC, I reported frequently about how the growth of online real estate listings would allow people to sell their own homes and would dramatically cut down Realtor commissions (disclosure: my wife has been a Realtor since the 1980s).

But commissions never did collapse: they are still 5 or 6 percent. There are two reasons for this: first, it is very difficult for most people to sell their homes by themselves, and second; companies like Zillow are not trying to cut out realtors, or reduce their commission. They are doing the opposite: they want more Realtors to pay the roughly $300 a month to advertise on the site.

And that's where the combined Zillow-Trulia company could be a concern: they would most likely raise their prices. Realtors who have stopped advertising in local newspapers and who now depend on online advertising would have few options. Sure many still send out farm letters, but many have stopped advertising in local newspapers.

b) Then discount store chain Dollar Tree is buying rival Family Dollar stores for $74.50 a share in cash and stock. That represents a 23 percent premium to family dollar's close Friday.

2) Europe is gradually moving toward sanctioning Russia. The European Union appears willing to go beyond freezing assets, and is now considering imposing additional sanctions on whole sectors of the Russian economy. According to the FT, the new sanctions would ban Europeans from participating in the sale of new stocks or bonds of large Russian state-owned banks; bar exports of deep-sea drilling equipment used by Russian energy companies; and impose an embargo on all weapons sales.

--By CNBC's Bob Pisani

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

Wall Street