An article in the Wall Street Journal this morning reports that Morgan Stanley came out with a memo about hedge funds lowering their leverage in the market. Hedge funds clearly don’t see big returns coming from borrowing money in the near term, basically a reflection on what might be considered a potentially volatile market going forward. Futures are up in Monday's pre-market, but only slightly.
Markets were down Friday, despite continuing strong data from the U.S. labor market. Low oil prices building the wall of worry over global economic sluggishness as well as its growing negative impact in oil & gas manufacturing are helping bears seize momentum. And now with oil falling below $47 per barrel, expect the hand-wringing to continue.
But with Q4 earnings season right around the corner, better-than-expected gains from companies based partly or mostly on lower oil prices may be just the salve the market needs to regain some traction.
MedTech continues its M&A narrative this morning: Shire (SHPG) is buying NPS Pharma (NPSP) for $5.2 billion — it’s biggest acquisition to date — AmerisourceBergen (ABC) is taking over MWI Veterinary (MWIV) for an 8% premium or $2.5 billion, and Roche (RHHBY) is buying a majority stake in Foundation Medical (FMI) for $1.2 billion, sending FMI shares up in the pre-market a whopping 118%.
Later today we anticipate Zacks Director of Research Sheraz Mian’s latest Earnings Preview, which will discuss the lay of the land as Q4 earnings season gets “unofficially” underway tomorrow with the earnings report from Alcoa (AA), complete with a table of every company expected to report earnings before the market open or after the close. Click here for the most recent version.
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