David Fry's Daily Market Outlook

With so much money floating about it's not surprising to see more acquisitions. The bonuses from M&A activity for bankers may approach levels of their trading desk brethren in this last quarter. The list today included: $26B Freeport-McMoRan Copper & Gold Inc.(FCX) acquisition of Phelps Dodge Corp. (PD) [Copper], Nasdaq Stock Market Inc. (NDAQ) bids $5B for LSE, Blackstone Group $36 deal for Equity Office Properties Trust (EOP) REIT and so forth. Friend and colleague Greg Newton does the math well.

Most investors have been mystified by the rise in REITs to unprecedented levels as yields fall to meager levels. We had speculated in the past that the only way to justify these high levels and low yields was merger activity. That seems to be the case as reported by MarketWatch.

Looking for other meaningful action today most was in Asia and it was negative. Weighing on the minds of Japanese investors was the threat that favorable capital gains tax regulations would expire and worries over "rumors" of a hedge fund blow-up [denied] from Citadel in Chicago.

Other than all the hoopla surrounding the aforementioned deal activity other markets were relatively quiet today. Enough said.

Disclaimer: The ETF Digest maintains positions in: Materials Select Sector SPDR (XLB), NIKK and iShares MSCI Japan Index ETF (EWJ).