What’s in the News?
- New unemployment claims in US fell to a nine-month low last week, indicating that strong job growth per- sisted in October and the labor market remains tight. Weekly jobless claims decreased 13,000 to 198,000.
- China’s economy grew at a faster-than-expected in the third quarter, suggesting the recent flurry of policy measures is helping to bolster a tentative recovery. 3Q GDP grew at 4.90% vs expectations of 4.40%.
Earnings
Markets
Deal Flows
- The largest deal in Microsoft history has closed after more than 20 months with its USD 69B acquisition of Activision Blizzard. After hefty regulatory review the deal was finally approved by US and UK.
- In the last fiscal year Activision Blizzard generated USD 7.5B in revenue, but the full benefit for Microsoft will likely come with its synergy with its hardware and software infrastructure.
- Beijing is weighing holding up U.S. chipmaker Broadcom Inc’s USD 69B purchase of cloud computing company VMware Inc after indications that that the US may implement tougher chip controls on sales to China. The deal was expected to close this fiscal year but may now faces risks of falling through.
India Corner
- The spread of Israel-Palestine conflict has caused fertilizer stocks in India to rise double digits over the last month. Israel’s Ashdod port is a major hub for potash exports and any restrictions or disruption of operations could lead to an increase in fertilizer prices globally.
- Adani Group has raised USD 3.5B from 10 global banks to refinance debt used to purchase Ambuja Ce- ments and ACC, in a sign that the company is moving past the Hindenburg crisis.
- The refinancing is expected to result in an overall cost saving of USD 300M for Adani Group.
Corporate America’s Profit Outlook Improves
- A key determinant of whether the earnings recovery can last is the US consumer.
- Risk is higher for low-middle income re- tailers that cater to consumers more sensi- tive to inflation,
- However, brands like Nike and Uniqlo con- tinuing to issue upbeat forecasts on the back of strong demand.
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