Oil Whipsaws, S&P Flat as Quarter End Looms
Oil was trading up early in the morning, despite the Saudis agreeing to raise oil production 200,000 barrels a day -- however, about 8:30am ET, after the dollar had been strengthening, oil began moving down. Gold also weakened, down 2.7 percent.
Options on gold and all the metals expire on the 25th, one trader said it was "just too much for the funds." That is too much unknown news with the Fed meeting, and they don't know how much more the Saudis will raise oil production.
(Nore: If crude comes off it drags down gold).
The Fed meeting this week is widely anticipated to be a non-event, with no rate raise and a lot of rhetoric about inflation.
More important is the end of the quarter, with only six days remaining. The S&P 500 is essentially flat this quarter, which is a major disappointment, since April and May were up; we have fallen apart in June (down nearly 6 percent!) and are now very near the lows for the quarter. With a flat quarter, many traders signalled that they expected meekness and defensiveness to be the prevailing strategy going into the close of the quarter.
Well, there are some mergers this morning, which should put a few much-needed shekels in the coffers of the investment banks.
Bunge to buy Corn Products for $4.8 billion for Corn Products, $56/share, a 31 percent premium to Friday's close.
Corn Products is the #4 manufacturer of high-fructose corn sweeteners. The deal will supposedly broaden the products it sells to customers and extend their reach into new markets in Asia.
Bunge also announced they were raising full year guidance to $9.35-$9.65 from $7.10-$7.40 (!) Remember, they are also in the fertilizer business, as well as agribusiness.
Republic Services formally announced they were buying Allied Waste, in deal that had already been widely leaked.
The deal is $6.1 billion, valuing Allied at about $14.04 a share, a small premium over Friday's close. The deal combines the number two and three companies in the solid waste industry (Waste Management is #1)
The Chicago Mercantile Exchange announced a share buyback program of up to $1.1 billion of Class A stock and a special dividend of $5; up nearly 3 percent pre-open.
Citi plans to dismiss up to 10 percent of the 65,000 people in their investment banking division, according to the Journal (Citi will not confirm), while the Financial Times is saying Goldman Sachs cut its investment banking division last week.
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