- Stocks set to rally on bin Laden's death. Stocks may today extend a four-day rally as President Obama confirms that U.S. forces have killed Osama bin Laden in Pakistan, with S&P futures +0.6% at 6:20 ET. Crude oil prices were -2.3%, while the dollar index gained 0.3% in Asian trading to 73.155 after sinking to a three-year low last week. While some believe bin Laden's death could reduce the burden of U.S. military expenses, others are skeptical, with one commentator noting that bin Laden's death "doesn't change much about the energy situation and doesn't change much about the ongoing battle with radical Islamists."
- Teva to buy Cephalon in $6.8B deal. Teva (NASDAQ:TEVA) has agreed to acquire the outstanding shares of Cephalon (NASDAQ:CEPH) for $81.50 a share in cash, giving the latter a total enterprise value of approximately $6.8B. News of the deal comes just days after the EU opened an antitrust probe into an agreement between Cephalon and Teva on generic modafinil in the European market. The combined company will have around $7B in sales and a pipeline of more than 30 late-stage compounds. The firms also calculate cost synergies of at least $500M. The development is a blow to Valeant (NYSE:VRX), which had been pursuing Cephalon. Premarket: TEVA +0.9%, CEPH +4%, VRX -5% (7:00 ET).
- Silver plunges 12% in 11 minutes. The price of spot silver experienced one of its most dramatic falls ever, collapsing 12% in 11 minutes of early trading in Asia. The metal was -5.3% at $45.38 an ounce at 6:20 ET. One trader attributed the drop to profit-taking, with the fall following an extended rally that has taken prices to 31-year highs. Thin holiday trading may also have exacerbated the plunge. In the week ended April 26, hedge-fund managers and other large speculators cut their net-long positions in New York silver futures by 26%. The fall also came after Comex increased the minimum amount of cash traders must deposit for speculative positions.
- Terex bids €884M for Demag. U.S. crane maker Terex (NYSE:TEX) is launching a public tender offer of €884M ($1.31B) for Germany's Demag Cranes (OTC:DMGCF) after the latter's management turned its back on talks. Analysts said they expected Terex would have to raise its offer to clinch the deal, with one saying that it may also face a counterbid from Finland-based Konecranes (OTC:KNCRF). Demag's shares rose 22% in Germany on the news, rising above Terex's bid of €41.75. The U.S. firm plans to finance the takeover with existing cash and committed debt financing. The combined 2010 revenues of the merged group would be approximately $5.8B and it would have 22,100 employees worldwide.
- Berkshire Hathaway Q1 profit slumps 58%. Berkshire Hathaway (NYSE:BRK.A) estimates its Q1 net profit plunged to $1.5B from $3.6B a year earlier due to $1.7B in pretax insurance losses following major disasters in Japan, Australia and the U.S. Speaking at Berkshire's annual meeting in front of 40,000 shareholders, Warren Buffett described the period as "probably the second-worst quarter for the insurance industry in terms of disasters." Full results are due Friday. Buffett also admitted making a mistake in not asking former executive David Sokol more about his Lubrizol (LZ) stock when they first discussed the company in January, and Buffett acknowledged that his initial statement about the affair was poorly written.
- Danisco backs DuPont's higher $6.64B bid. Danisco (OTC:DNSCY) today urged shareholders to approve a 'best and final offer' of $6.64B from DuPont (NYSE:DD) after the latter raised its bid for the Danish food ingredients and enzymes maker by 5%. DuPont announced the increase on Friday, just before the expiration of the previous bid, and extended the tender period by two weeks. It first agreed on a deal for Danisco in January but by late Friday had only received acceptance representing 48% of shares. DuPont also lowered the acceptance level to 80% from 90%.
- Canada goes to the polls as left-wing party surges. Canadians are voting in yet another general election today as polls show that the left-leaning New Democratic Party has surged to second behind Prime Minister Stephen Harper's Conservatives. The prospect of the NDP in government has rattled Canada's financial community, as its leader Jack Layton has pledged to boost spending, with increases for health-care and benefits for seniors, and to hike corporate taxes. Harper has warned that the NDP's "economic platform would be an utter disaster," but the party says its program is sound and responsible.
- Warner could be sold this week. Third and final bids for Warner Music Group (NYSE:WMG) are due today and the company could be sold by the end of the week in a deal valued at over $3B, a source said. Offers from two financial groups lead the round, with the interested music companies facing high hurdles from Warner's board, which fears regulatory delays from an industry deal. Sony (NYSE:SNE) is on the sidelines and BMG dropped out last week.
- Senators draw up bipartisan deficit plans. The House GOP has its plan to cut the deficit by $6.2T and Obama has his $4T program. Now six senators, three from each side, are formulating a bipartisan budget to slash borrowing by $4T over the next decade. The Republicans would have to agree to tax hikes, and the Democrats to cuts to healthcare programs and even Social Security. Another bipartisan play aims to save $7.6T over 10 years by capping federal spending at 20.6% of GDP within a decade, down from 24.3% now.
- Japan passes earthquake recovery budget. Japan's parliament has approved an earthquake and tsunami recovery budget of ¥4T ($48B), although this is far less than the estimated $300B in damage that the disaster caused. The budget also doesn't include support for the operator of the stricken Fukushima Daiichi nuclear power plant, Tokyo Electric Power, which Chief Cabinet Secretary Yukio Edano said bears unlimited liability. The budget does include aid for disaster-hit businesses.
- Five banks close on Friday. Regulators shut five banks in Michigan, Georgia and Florida on Friday, bringing this year's total number of bank failures so far to 39. The collective cost of the closures to the federal deposit insurance fund is $643.2M.
Earnings: Monday Before Open
- DISH Network (NASDAQ:DISH): Q1 EPS of $1.22 beats by $0.54. Revenue of $3.22B (+5.2% Y/Y) misses by $0.01B. (PR)
- Humana (NYSE:HUM): Q1 EPS of $1.86 in-line. Revenue of $9.19B (+9.7% Y/Y) beats by $0.05B. (PR)
- Loews Corp (NYSE:L): Q1 EPS of $0.92 beats by $0.01. Revenue of $3.66B (-1.2% Y/Y) beats by $0.05B. (PR)
- In Asia, Japan +1.6% to 10004.2. Hong Kong closed. China closed. India -0.7% to 18998.
- In Europe, at midday, London closed. Paris +0.2%. Frankfurt +0.8%.
- Futures at 7:00: Dow +0.5%. S&P +0.5%. Nasdaq +0.5%. Crude -1.8% to $111.86. Gold +0.04% to $1557.
Monday's Economic Calendar
- Notable earnings after Monday's close: ADP, APC, CHK, CRK, DCT, DNDN, FST, HIG, HOLX, KFN, MEE, NETL, NLY, PFG
The SA Currents team contributed to this post.
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