M&A Activity

Pandora Media (P) agreed to be acquired by SiriusXM (SIRI) for an all-stock transaction.  Pandora shareholders are to receive 1.44 shares of SIRI.  P is trading 2.15% higher at $9.30, while SIRI is lower by over 8% on concerns they will have their work cut out to justify the purchase.       

Comcast (CMCSA) outbid 21^st Century Fox (FOXA) for Sky, agreeing to acquire the company for $40 billion, close to double what Sky was trading for a year ago.  CMCSA is trading lower by 7% as investors are concerned it over payed for Sky.  Disney (DIS) is trading higher as shareholders are relieved that FOXA failed to acquire the shares of Sky it did not already own (FOXA holds 39% of Sky).  DIS is awaiting approval to acquire FOXA.            

Barrick Gold (ABX) will merge with Randgold Resources (GOLD) creating an $18 billion gold company. John Thornton, Executive Chairman for Barrick Gold said “The combined company will have five of the world's top 10 tier one gold assets like total cash cost. We will have the lowest total cast cost position among the senior gold peers, and we have the potential to add to these tier one assets with extensive land positions in many of the world's most prolific gold districts."

Michael Kors (KORS) is rumored to be close to purchasing Versace for $2 billion according to people familiar with the situation.  Talks are said to be in the advanced stages, although no final agreements have been confirmed.  It is thought that KORS, Tiffany, PVH and Tapestry (Coach) all expressed interest in the Italian fashion house.  Versace is 80% owned by the Versace family and 20% by the private equity firm Blackstone.  Last year, KORS purchased shoe company Jimmy Choo for $1.2 billion.  Jimmy Choo contributed to KORS top and bottom lines in the last quarter.  Although details of a Versace deal have yet to be released, KORS is trading down over 8.5% as the market believes that KORS may overpay for Versace. 

OPEC

West Texas Intermediate crude oil (WTI) is trading higher by 2.2%, $1.57, @ $72.35.  Over the weekend, OPEC and non-OPEC producers ended without an agreement to increase output in an effort to counter falling supply from Iran due to U.S. sanctions.  Even if there an agreement to increase production was reached, analysts are worried how much extra capacity is actually in the system and if it is enough to meet increasing demand.  The PHLX Oil Service Index (OSX) is higher by 0.75% as it expands on its breakout from a downtrend double bottom formation.

Transportation stocks are trading lower; higher crude prices squeeze margins.  The Dow Transportation Index is lower by 1.5%, led by airlines stocks (-2.57%). 

Rumors are swirling that Deputy Attorney General Rod Rosenstein, who oversees Robert Mueller’s Russia investigation, is going to resign.  Sources say he expects to be fired, and he was considering stepping down.  His departure would raise concerns about the fate of the ongoing Mueller investigation.  The White House claims Rosenstein and President Trump will meet on Thursday to discuss his fate. 

• The Dow is lower by 0.65%
• The S&P 500 is lower by 0.50%
• The Nasdaq is lower by 0.12%
• The Russell 2000 is lower by 0.80%

Breadth: Weak

• NYSE declines 2,036 lead advances 885; new 52-week lows 100 to new highs 42
• Nasdaq declines 1,906 to advances 1,053; new 52-week lows 33 to new highs 38