Before the Bell: $5 Billion for WaMu; $39 Billion in Eye-Care
WaMu is shoring up its balance sheet with a $5 bln injection.
Bloomberg reports shares of Washington Mutual (WM) surged 17% in overseas trading this morning after the company said it may receive $5 billion from private equity firm TPG. This comes after the WaMu, the largest savings and loan in the U.S., lost 74% of its market value in the last 12 months. The company has been late to the game in the subprime market and has posted more than $3 billion in writedowns and loan losses. Last month, Standard & Poor's cut the company's credit rating to BBB from BBB+, two levels above junk status, and added that further reductions were possible. For more, Read Minyanville Editor Andrew Jeffery's column, WaMu Shores Up Balance Sheet .
From the Bull Pen: Bulls playing the upside bounce in the financials can use the financial ETF (XLF); sell-stops below $25.70.
From the Bear Cave: Bears are looking for a similar downside play in Wachovia (WB); entry near $30 with buy-stops set above the 50 DMA ($31.72).
$39 Billion in Eye-Care
According to Reuters, Novartis (NVS), Switzerland's second-largest drugs company, agreed to buy Nestlé's 77% stake in U.S. company Alcon (ACL). The deal, which could be worth up to $39 bln, would make Novartis the world's biggest maker of eye-care products. Novartis will first acquire a 25% stake for $11 billion at a 4% discount to ACL's Friday closing price, but the company will retain the option to acquire the remaining 52% for a fixed price of $28 billion between January 2010 and July 2011 marking a 22% premium. Among the reasons for the acquisition, Novartis CEO Daniel Vasella said "the margins are higher than our pharma business and are obviously very attractive." For context in the pharma space, read Todd's Quarterly Report Card: Grading the Tape.
From the Bull Pen: Another option for bulls is Wyeth (WYE). Sell-stops can be set below $39.
From the Bear Cave: Bears can play the downside in Pfizer (PFE); entry near $31.50 with near-term buy-stops above $22.
For more ideas, see Minyanville's Spotlight Stocks.
Quick Check Around the World
Asian trading closed with the Hang Seng +1.29%, Nikkei +1.18%, Sensex +2.70%, Taiwan +1.55% and Shanghai +4.45%.
Glancing towards Europe, we find the CAC +1.00%, DAX +0.98%, FTSE +0.93%.
As of 8:30 AM EST, S&P futures are higher +11 points to 1383, and Nasdaq futures are up +15 points to 1884.
A Look At Commodities
Commodities are mixed. Crude oil is higher +1.17 to 107.40. Gold is up +6.40 to 915.40. Silver is down -0.065 to 17.815, and copper is off -1.8 to 396.00.
The dollar index is higher +0.206 to 72.227.
On the Radar
3:00 Consumer Credit: $5.5 bln cons
Click here for the full trading radar.
Happy Monday! Have a great day!
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