The big macro-palooza: data, more data, and the FOMC

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This is a big week for macro news: a Federal Reserve meeting, an advance look at second-quarter U.S. growth (likely in the 1 percent range), and July's nonfarm payroll report. But the bigger story may be the weakness of the U.S. dollar.

Traders believe Fed Chairman Ben Bernanke will remain dovish at this week's meeting, even if not much else is expected. This is weighing on the greenback.

Japanese stocks, for example, down 3.2 percent again (4th straight drop) as the yen rallies to a one-month high against the dollar. There was disappointing retail sales over there, but there is also rumors that Prime Minister Shinzo Abe may water down his sales tax proposal (he is supposed to go to 10 percent from 5 percent). By increasing the price of goods, the hope is that inflation would rise, and the government would then use the money for stimulus.


1) Merger Monday has a clutch of companies stealing headlines:

a) Omnicom and Publicis are in a 50-50 merger that will form the world's biggest advertising firm. Both are up notably this morning, as is rival Interpublic Group.

b) Perrigo to buy Elan for $8.6 billion in cash and stock; and

c) Lord & Taylor owner Hudson Bay Company taking Saks private for $16 a share.

The latter is the one that interest me the most. Absent a real estate play, the deal makes little sense. Sure, Hudson Bay will likely take Saks to Canada, where they need more luxury stores. Also, there is now increased scale for buying and distribution. In addition, Lord and Taylor also could use some sizzle and heft, and this acquisition could enable them to get better designers, according to analysts.

Still, you need something else to make the deal work. Saks is expected to earn 46 cents per share this year in profits. At a $16 price, that puts it at roughly 30 times earnings. It hardly makes sense, even if you goose earnings assumptions.

No, this deal only makes sense if you include the value of the real estate. Morningstar, in an analysis done a week ago, estimated that if you separate the real estate assets through some kind of sale-leaseback, the 5th Avenue store alone (if rented out at $100 a square foot) would be worth $40 million a year, which is two-thirds of the company's 2013 earnings projections.

2) Hertz reported an in-line quarter and left guidance unchanged, which will likely disappoint the Street. Regardless: the stock is up 80 percent this year, mostly on the price increases the company has managed to push through.

Have you rented a Hertz car recently? I have. You can spend $100 a day very easily, even with little or no insurance. The company is maintaining conservative pricing assumptions (flat). As a consumer, let's hope so.

3) Caterpillar is looking to blunt the effect of its downward earnings guidance last week, has announced an accelerated share repurchase program, an additional $1 billion of Caterpillar stock (about 2 percent of outstanding shares) to be purchased from Societe Generale.

By CNBC's Bob Pisani

  • Bob Pisani

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