Market Overview

Durable-Goods Downer Could Kill Mega-Deal Buzz

Durable-Goods Downer Could Kill Mega-Deal Buzz

Is there some secret holiday at work in the stock and currency markets that I'm unaware of? Volume is non-existent, with only deal buzz potentially stirring the Street from this spring slumber.

Conditions can only be characterized as rail-thin, holiday-like volumes that leave major stock averages teetering just below record highs.

In fact, the bond market has rallied for three days in a row, pinning down market interest rates even as the stock market had started to wrap its arms around gradually higher Federal Reserve rates beginning later this year.

Gold has quietly rallied to two-week highs and is knocking on $1200 an ounce again. There's a real lack of direction that is surely turning some stock bulls into nail-biters.


Next Leg for the Dollar?

The U.S. dollar, trading earlier this month at a 12-year high against the euro, has been locked in a tight range in recent sessions and that inaction appears to be holding the stock market in limbo.

The dollar tipped lower then stabilized Wednesday when the euro firmed on data showing German business confidence rose in March for the fifth straight month, hitting its highest level since July 2014.

Oil prices were also suspended in paper-thin pricing action ahead of crude-stockpile data from the U.S. Energy Information Administration due later. In a separate report, the American Petroleum Institute said its data for last week showed a 4.8-million-barrel gain in crude-oil supplies.

Related Link: Debunking The Option-Trading Myth Of Zero Sum

Ketchup On Your Mac N Cheese?

Deal hype could boost the broader market. Kraft Foods Group (NASDAQ: KRFT) shot higher in early trading Wednesday after the company and H.J. Heinz Co. have agreed to form what will be the third-largest U.S. and fifth-largest food and beverage company in the world.

The Wall Street Journal puts the deal at over $40 billion. Most analysts see the tie-up, backed by Warren Buffett's Berkshire Hathaway (NYSE: BRK-B)(NYSE: BRK-A) and a Brazilian private-equity firm, as a defensive move to shore up a market model under fire from changing tastes away from packaged, processed food.

The combined company, which will be called The Kraft Heinz Co., will have revenue of $28 billion, the companies said. This wasn't the only deal news to hit. Shares of Kofax (NASDAQ: KFX) were up over 40% in early Wednesday action after the software company agreed to be acquired by Lexmark International (NYSE: LXK) late Tuesday.

Durable Goods

Weak All Around. Orders for long-lasting U.S. goods fell in February for the third time in four months, a report that could have mixed implications for stock trading because its weak tone is longer-term negative but could also slow Federal Reserve interest-rate hikes.

Durable-goods orders declined by a seasonally adjusted 1.4% last month, government data showed. Weakness in the volatile aircraft category was partly the culprit.

But … even omitting the volatile transportation sector, orders still fell by 0.4% and were negative for the fifth month in a row. Orders for core capital goods, which can be a proxy for business investment, slumped 1.4% in February and fell for the sixth straight month.

Good trading,



This piece was originally posted here by JJ Kinahan on March 25, 2015.

A long call or put option position places the entire cost of the option position at risk. Should an individual long call or long put position expire worthless, the entire cost of the position would be lost.

Spreads and other multiple-leg option strategies can entail substantial transaction costs, including multiple commissions, which may impact any potential return.

A rollover is not your only alternative when dealing with old retirement plans. Please click here for more information on rollover alternatives.
Futures and futures options trading is speculative, and is not suitable for all investors. Please read the "Risk Disclosure for Futures and Options" prior to trading futures products.

Market volatility, volume, and system availability may delay account access and trade executions.

Past performance of a security or strategy does not guarantee future results or success.

Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.

Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.

The information is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.

TD Ameritrade, Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2015 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.

Posted-In: JJ KinahanOpinion Economics Markets Best of Benzinga


Related Articles (BRK-A + BRK-B)

View Comments and Join the Discussion!

Partner Center