Wall Street Breakfast: FedEx To Buy TNT Express For €4.4B

11 comments  |  Includes: BA, DAL, FDX, GM, GS, HUM, QQQ, SPY, SSNLF, TNTEF, UNH,

Economy
Eurozone business activity powered ahead in March, with services PMI rising to 54.2 from 53.7 in February, while the composite figure increased to an 11-month high of 54 from 53.3. "Ireland and Spain continued to lead the charge, backed up by a fast-improving German economy," says Markit, but "rates of expansion in Italy and France were modest in comparison." The PMIs indicate Q1 GDP growth of 0.3%, although the "expansion looks set to gather pace." The euro was -0.6% at $1.0853 at the time of writing.

U.K. services PMI jumped to a seven-month high of 58.9 in March from 56.7 in February, boosted by a stronger rise in new business. The latest PMI surveys indicate that the economy grew 0.7% in Q1 following a slowdown late last year. "Faster growth of new business and improved expectations...bode well for the upturn to retain strong momentum," says Markit. The pound was-0.1% at $1.4866 at the time of writing.

The Reserve Bank of Australia has unexpectedly kept its benchmark cash rate at a record-low 2.25%, although Governor Glenn Stevens signaled that the RBA could cut in the future, "in order to foster sustainable growth in demand and inflation consistent with the target." The market had expected the RBA to reduce rates today after a quarter-percentage-point cut in February, due to sluggish growth, increasing unemployment, slumping iron-ore prices and China's slowdown. The Aussie dollar was +1.1% at $0.7677 at the time of writing.

Stocks
FedEx has agreed to acquire struggling TNT Express (OTCPK:TNTEF) for €4.4B ($4.8B) in a deal that will give the U.S. company access to the Dutch package-delivery firm's European road network. FedEx (NYSE:FDX) hopes to succeed where United Parcel Service (NYSE:UPS) failed two years ago, when the EU moved to block a bid of almost €7B due to antitrust concerns. However, unlike FedEx, UPS already had a significant European presence when it tried to acquire TNT.

European shares have risen sharply today following the long Easter weekend break, as have Asian stocks, driven by a positive session on Wall Street yesterday. With bad news being good again, the poor U.S. jobs report has increased expectations that the Fed will put off its rate hike and has thus boosted sentiment in equity markets.

Samsung Electronics' Q1 operating profit slumped a preliminary 31% to 5.9T won ($5.4B), although the figure represents a slowdown in the company's earnings decline and topped analyst forecasts of 5.5T won. Sales dropped 12% to 47T won, below consensus of 50.1T won. Samsung's (OTC:SSNLF) earnings have fallen for six consecutive quarters, although the South Korean company is hoping that Friday's launch of the Galaxy S6 will help revive its fortunes.

The government surprisingly intends to increase Medicare Advantage payments by about 1.25% in 2016, reversing a proposal to make a cut of 0.9%. The move should benefit insurers such as UnitedHealth (NYSE:UNH) and Humana (NYSE:HUM). The change is mainly connected to tweaks in estimates of how fast Medicare spending has been rising rather than to changes in policy.

Canada plans to exit its position in General Motors (NYSE:GM) by selling more than 73M shares to Goldman Sachs (NYSE:GS) in an unregistered block trade that is due to close on Friday. GM shares ended at $36.66 yesterday, making the transaction worth $2.7B, although the stock was -1.7% premarket.

Viacom will take a $785M pretax writedown/amortization for Q2 in connection with its layoffs and restructuring. Part of the amortization reflects new expectations for revenue in "certain original programming genres that have been impacted by changing media consumption habits." Viacom (NASDAQ:VIAB) is also pausing its buyback program until October. The company expects the actions to save $175M in FY 2015 and $350M a year on an ongoing basis.

The International Association of Machinists & Aerospace Workers has withdrawn its application to organize flight attendants at Delta Air Lines (NYSE:DAL), saying some authorization cards submitted by workers contain insufficient information or questionable signatures. The union intends to resume organizing and refile for a vote in 12 months. The IAM is also seeking to organize workers at Boeing (NYSE:BA) facilities in South Carolina, with a vote set for April 22.

Today's Markets:
In Asia, Japan +1.3% to 19641. Hong Kong +0.8% to 25276. China +2.5%to 3961. India flat at 28517.
In Europe, at midday, London +1.3%. Paris +1.3%. Frankfurt +1%.
Futures at 6:20: Dow flat. S&P flat. Nasdaq +0.1%. Crude -1% to $51.63. Gold -0.7% to $1210.10.
Ten-year Treasury Yield -1 bps at 1.895%.

Today's economic calendar:
8:30 Gallup US ECI
8:55 Redbook Chain Store Sales
10:00 Job Openings and Labor Turnover Survey
1:00 PM Results of $24B, 3-Year Note Auction
3:00 PM Consumer Credit

Notable earnings before today's open: GBX, SCHN

Source : http://seekingalpha.com/article/3054246-wall-street-breakfast-fedex-to-buy-tnt-express-for-4_4b