#PreMarket Primer: Tuesday, June 24: Pressure On Maliki To Step Down Intensifies
US Secretary of State John Kerry traveled to Baghdad on Monday to pledge the US' “intense” and “sustained” support in Iraq's ongoing crisis. However, the promise of support came with one condition; that the Iraqi government take the necessary steps to reunite the nation.
The White House answered calls from Iraqi leaders for an air strike by offering 300 military advisers and asking the nation's government to address the underlying issues by reorganizing the government and including the voice of minority parties.
In his discussions with Nouri al-Maliki, Kerry said the Iraqi Prime Minister had committed to create a new government that would include minority parties like Sunnis and Kurds beginning on July 1. Still, many believe that the conflict can't be resolved until Maliki steps down.
In other news around the markets:
- The Wall Street Journal reported that Lululemon Athletica founder Dennis Wilson is working with Goldman Sachs to find a way to reorganize the company's board of directors. After a very public disagreement with the board last week, Wilson could be considering teaming up with a private equity firm for a buyout or a proxy fight.
- Last week, Valeant Pharmaceuticals offered to pay Allergan shareholders $72.00 as well as 0.83 Valeant share per Allergan share. On Monday, Allergan responded by saying the tender offer was “grossly inadequate” as it undervalues the company and would be a risky move for shareholders. Valeant's offer will expire on August 15, with the possibility of being extended.
- The investigation into insider trading allegations against activist investor Carl Icahn, pro golfer Phil Mickelson and Sports bettor William Walters continued as Federal authorities subpoenaed both Dean Foods Co. and Chlorox Co. It isn't clear what type of information investigators have requested from the two companies, but all three of the accused men claim they had no involvement and no charges have been filed to date.
- After American Apparel Inc. founder Dov Charney was ousted from the company's leadership by the board of directors last week, he began to look for a way to maintain his post as CEO. Charney filed a petition for arbitration on Monday, saying that some shareholders may be open to making changes to the board.
Asian markets were mostly higher; the NIKKEI rose 0.05 percent, the Shanghai composite was up 0.47 percent, the Shenzhen composite gained 0.65 percent, the Hang Seng index rose 0.33 percent and the KOSPI was up 0.98 percent.
Europe's markets continued to struggle on Tuesday; the STOXX 600 and the FTSE both fell 0.12 percent, the DAX lost 0.04 percent, the MIB was down 0.32 percent and the IBEX fell 0.10 percent.
Energy futures eased as geopolitical tension around the globe lessened. Brent futures were down 0.31 percent and WTI futures lost 0.54 percent. Gold was down 0.09 percent, but silver gained 0.05 percent. Industrial metals were also mixed with copper and tin down 0.06 percent and 0.11 percent respectively, but aluminum up 0.21 percent and zinc up 0.32 percent.
The euro made a modest comeback on Tuesday morning, gaining 0.12 percent against the dollar, 0.21 percent against the pound and 0.09 percent against the yen. The dollar was up 0.09 percent against the pound, but lost 0.15 percent against the franc and 0.04 percent against the yen.
Notable earnings released on Monday included:
- Micron Technology (NASDAQ: MU) reported third quarter EPS of $0.79 on revenue of $3.98 billion, compared to last year’s EPS of $0.04 on revenue of $2.32 billion.
- Sonic Corp. (NASDAQ: SONC) reported third quarter EPS of $0.30 on revenue of $152.20 million, compared to last year’s EPS of $0.26 on revenue of $146.63 million.
Stocks moving in the Premarket included:
- Berkshire Hathaway (NYSE: BRK-B) gained 2.35 percent in premarket trade after rising 0.41 percent over the past five days.
- Bed Bath & Beyond (NASDAQ: BBBY) was down 0.85 percent in premarket trade after climbing 1.51 percent on Monday.
- Staples (NASDAQ: SPLS) fell 0.71 percent in premarket trade after gaining 1.63 percent over the past week.
- Carnival Corp (NYSE: CCL) was down 0.41 percent in premarket trade after a steady 2.58 percent climb over the past five days.
Notable earnings expected on Tuesday include:
- Carnival Corporation (NYSE: CCL) is expected to report second quarter EPS of $0.02 on revenue of $3.61 billion, compared to last year’s EPS of $0.09 on revenue of $3.48 billion.
- Walgreen Co. (NYSE: WAG) is expected to report third quarter EPS of $0.94 on revenue of $19.30 billion, compared to last year’s EPS of $0.85 on revenue of $18.31 billion.
Tuesday's economic calendar will be dominated by US data, with new home sales data being a star. After better than expected existing home sales data out on Monday, many are looking for today's report to confirm that the US housing market is getting back on solid ground. Other notable releases include US consumer confidence, US oil inventory data, the US redbook, the Italian trade balance and Germany's Ifo Business Climate index.
For a recap of Monday’s market action, click here.
Tune into Benzinga’s #PreMarket Prep today to hear Barry James, Sang Lucci and Nic Chahine by clicking here!
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