Traders Await Fed Now, Elections in Nov.
What's the next move for the Fed? The FOMC minutes out today at 2pm ET. Recall that last time the Committee indicated they may need to take more initiatives: "The Committee would need to consider steps it could take to provide additional policy stimulus if the outlook were to weaken appreciably further."
1) Poll data looks worse for Democrats, and many traders are now shopping the idea of a second rally (after September's big move up) that will occur in late October/early November, thanks to the double whammy of elections and Fed QE.
2) Thailand joining Brazil in trying to curb capital inflows and slow down currency inflation: they are instituting a 15 percent withholding tax on interest payments and capital gains on bonds held by foreign investors.
3) Cash is King…and King for Cash: King Pharmaceuticals rises 40 percent after agreeing to be acquired by Dow component Pfizer for $3.6 billion in yet another cash deal. King shareholders will get $14.25/per share, a 40 percent premium to yesterday's close. The deal will be accretive to Pfizer's earnings beginning next year and is expected to close in 1-2 quarters.
Pfizer is desperately trying to plug the Lipitor hole — they have already bought Wyeth. With King they get a leader in pain management that they can plug into their existing primary care salesforce.
Keep an eye on two other players in the pain management space: Pain Therapeutics , and Endo Pharmaceuticals .
4) Roaring for a Deal: Lions Gate Entertainment has reportedly offered to merge with film studio MGM, which is in the midst of bankruptcy proceedings. According to the L.A. Times, under the potential deal, Lions Gate would get a majority 55 percent stake in MGM, a proposal that is supported by investor Carl Icahn, who — with a 37 percent stake — is currently Lions Gate's largest shareholder.
5) Tech Caution: Some caution out of the tech sector ahead of Intel's earnings report after the close today.
a) SanDisk and Micron are down about 1 percent after the president of Samsung warned of continued weakness in the global memory chip market into the first half of next year. Samsung, which makes electronics and chips, last week cut its sales and earnings outlook for the current quarter.
b) Ciena falls 3 percent after announcing an offering of $175 million in convertible notes and reaffirming guidance for the current quarter. Although it reiterated its guidance, the communications networking equipment maker's guidance remains quite conservative (revenues of $390 million-$409 million vs. $406 million consensus).
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