The Morning Call
3/21/16
The
Market
Technical
Monday Morning Chartology
You
don’t need this chart to know the S&P is on a moonshot. It has overcome several resistance levels
but still has more to go to get back to its all-time high. Right now the assumption has to be that
momentum will take it there, though I continue to believe that any challenge
will be unsuccessful.
The
long Treasury has had a bumpy ride of late as the risk on trade has been the
Market theme. On Friday, it started a
challenge of the upper boundary of a very short term downtrend; if that
challenge is successful, it would suggest a shift to more caution in investor
sentiment.
GLD
continues to hang tough even though it is extended in price to the upside. Nevertheless, some additional weakness seems
reasonable on a strictly technical; but it would take a major decline to do any
technical damage.
The
VIX has been battered over the last four to six week, negating a short term
uptrend and busting through its 100 day moving average. Not surprising, given stocks’
performance. However, you can see that
it is near the lower boundaries of its short and intermediate term trading
ranges. In the 10 to 12 price range, it
would be an excellent buy for portfolio insurance purposes.
Fundamental
***overnight,
Greece and its creditors adjourned a meeting dealing with a third bailout and
failing to reach an agreement; February Chinese auto sales plunged 44%.
Investing for Survival
Owning
cash makes you a better investor.
News on Stocks in Our Portfolios
·
Sherwin-Williams (NYSE:SHW) will acquire Valspar
(NYSE:VAL)
for $113/share in cash, or $11.3B, a 41% premium to VAL's average price over
the past 30 days. Excluding assumption of debt, the deal puts an equity
valuation of $8.9B on Valspar.
·
Sherwin-Williams and
Valspar have highly complementary paints and coatings offerings and this
combination enhances Sherwin-Williams position as a premier global paints and
coatings provider. The transaction results in an exceptional, diversified array
of strong brands and technologies, accelerates Sherwin-Williams growth strategy
by expanding its global platform in Asia-Pacific and EMEA, and also adds new
capabilities in the packaging and coil segments.
·
The combined company
would have pro forma 2015 revenue and adjusted Ebitda (including estimated
annual synergies) of approximately $15.6B and $2.8B, respectively, with
approximately 58,000 employees.
·
Sees $280M in
annual synergies.
·
Expects to close by
the end of Q1 calendar year 2017.
·
They expect that no or
minimal divestitures should be required to complete the transaction. In the
unlikely event that divestitures are required of businesses totaling more than
$650M of Valspar's 2015 revenue, the transaction price would be adjusted to
$105/share. Sherwin-Williams would have the right to terminate the transaction
in the event that required divestitures exceed $1.5B in 2015 revenue.
"These provisions provide Sherwin-Williams and Valspar with greater
closing certainty."
Economics
This Week’s Data
The
February Chicago Fed national activity index came in at -.29 versus
expectations of +.25. January’s number was revised up, but only by about one
half the difference.
Other
Update
on student loans (short):
Politics
Domestic
International War Against Radical
Islam
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