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Ahead of Wall Street

Monday, August 21th, 2017

While futures are modestly down overall ahead of today’s opening bell — seemingly continuing a mini-bear market that has descended after weeks of new all-time highs within a much grander bull market — we see a few headline stories sending some stocks higher. These stories all deal with mergers and acquisitions (M&A), but only one of three managed to strike a deal.

Maersk Oil Goes to Total

The oil & gas division of Danish shipping giant Moller-Maersk, Maersk Oil, has agreed to be bought out by French oil & gas behemoth Total TOT for roughly $7.45 billion, including $2.5 billion in debt. This acquisition is expected to make Total the second-largest oil & gas company to operate in the North Sea, where the majority of Maersk Oil assets lay.

Many analysts in the oil & gas industry, based on stubbornly low oil prices per gallon due to a years-long global oil glut, had been predicting just this sort of merger for awhile now. Reminiscent of the time when companies like Exxon and Mobil, Chevron and Texaco and BP and Amoco merged to create the very first “super-majors” in the industry, M&A activity looks to again be finally taking root in order to glean economies of scale for a commodity where $100 barrels of oil appear to be a fairy tale the farther removed we are from them.

Herbalife Stays Public, Celebrates Shareholders

Zacks Rank #2 (Buy)-rated Herbalife HLF is trading up 8% in today’s pre-market on a report that an unnamed private investor was unsuccessful in taking private the multi-tiered nutrition and weight-loss retailer. As a response to this news — and a further poke at Bill Ackman’s Pershing Square, which has been shorting Herbalife shares for years — the company has announced a Dutch tender offer of $600 million, or $60-68 per share, in what Herbalife considers “the best way to return money to our shareholders.”

Fiat Chrysler — Headed to China or Not"

China’s premiere SUV dealer Great Wall Motors has reportedly been considering a buyout of U.S./Europe-merged Fiat Chrysler’s FCAU Jeep unit for an undisclosed amount. This immediately sent shares of Fiat Chrysler up more than 3%, but that was before Fiat CEO Sergio Marchionne denied having any contact with the Chinese auto maker. Marchionne did confirm that the company is for sale, but neither he nor the top executives at Great Wall have confirmed talks.

Should a deal actually come through eventually, it could make Great Wall the second-biggest player in the Chinese auto market (behind Geely, which had bought the Volvo brand from Ford [F] 7 years ago). Yet despite the walking back of this story following its initial impact on the market, shares of FCAU continue to rise, now up 4.3% at this hour.

Mark Vickery
Senior Editor

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Earnings and Economic News

Key Earnings Reports For Aug 21, 2017

Economic Event Reported
(+) Treasury notes (10 yr) - Aug 21, 2017 4:15 PM Eastern Time
(+) Federal Funds Rate - Aug 21, 2017 4:15 PM Eastern Time
(+) Treasury bills (3 mth) - Aug 21, 2017 4:15 PM Eastern Time