Wall Street Focus: Mergers, Crude and Earnings
Speculation in London newspapers over the weekend about a potential $50 billion offer on the way for Alcoa from BHP Billiton is among the largest ofpossible deals for traders to focus on today.
Earlier the Financial Times' web site stirred some excitement after it reported that Vodafone has been mulling a blockbuster $160 billion for Verizon . But Vodafone has since issued a statement saying it has no plans to bid for Verizon.
The FT's Alphaville M&A blog, citing well placed financiers, reported that a number of deal structures had been examimed aimed at getting Vodafone the 55% of Verizon Wireless that it doesn't already own. Among structures, the purchase of all of Verizon and then a spinoff the former Baby Bell's fixed line businesses to a private equity group.
Alcoa could be the target of a bid as high as $50 billion, according to the Times of London on Sunday which reported activist shareholders were pushing for a deal of that size. BHP is seen as the most likely suitor, though there has been speculation that Brazilian mining company CVRD may also attempt to bid for Alcoa.
Alcoa was forced to drop its $28 billion offer for Alcan Aluminum late Thursday after Rio Tinto swooped in with a $38 billion offer.
Restaurant operator IHOP agreed to buy casual dining chain Applebee's International for $2.2 billion in cash. It will pay $25.50 a share for Applebee's, a 4.6% premium over the stock's Friday closing price.
To some, the Applebees deal might seem like a "take-under" since shares traded above $29 in May on speculation the chain would be sold.
Will $74 crude oil get the attention of Wall Street traders? Light Sweet crude, according to Stephen Schork, editor of the Schork Report, "appears well on its way to new all time high."
Schork, in his newsletter letter to the energy industry also pointed out that fund managers remain bullish. According to Commodities Futures Trading Commission data, "the funds have positioned themselves for a run at the all time high for prompt barrels on the NYMEX," wrote Schork.
"Large speculators now own nearly five times as many barrels on the NYMEX floor as there are actual we barrels sitting in the tank at the Exchange's hub in Cushing, Oklahoma... The only other time the funds were this long was back in May, 2006 before the run to a record high."
A Loaded Earnings Calendar
Starting Tuesday, second quarter earnings reports will begin flowing with full force.
Tuesday alone features reports fromMerrill Lynch and Coca Cola before the bell. After the bell, investors will hear from Intel and Yahoo.
Other companies due to report in the coming week include Microsoft, eBay, Google, Citigroup and JP Morgan Chase.
The coming week will also close out with an options expiration, which CNBC's Jim Cramer thinks will give a positive boost to the stock market.
"You've got to be long this market. It's just big," Cramer says. "What we saw this week was a broadening of the market that was very exciting." He says buying broadened out to familiar tech names and retail and the individual investor will now jump in. "You've got an accessible bull market."