Market Morning: Sears Rescued? Total Toyota Recall, Fed Gets Dovish, Aramco Opens Books

Stock Market Roundup

Lampert Ups Sears Bid by $600M With 4 Days Until Liquidation

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Sears (OTCMKTS:SHLDQ) again? Politics isn’t the only thing with endless back-and-forth-verge-of-catastrophe-last-minute-saves these days. It appears Sears Chairman Eddie Lampert is making another attempt to save the world’s oldest retailer. His new offer sweeten the pot by about $600 million, upping it from $4.4 billion to now $5 billion, which includes a $120 million deposit and an offer to assume tax and vendor bills since Sears declared bankruptcy, plus another $350 million to assume severance costs as the deal presupposes a cut in the Sears workforce from 68,000 to 50,000, and saving 425 stores. These include Kmarts, which merged with Sears. Apparently, the main concern with Lampert’s previous offer was that it was not enough to satisfy Sears’ administrative claims. Maybe this one is. What’s $600 million between billionaires anyway? Does the market believe the offer will be accepted? Watch the price of shares until Monday and find out.

SEE: Cannabis Stock News Daily Roundup January 9 

Futures Down, Asia Down On Low Chinese Inflation Data

Looks like stocks are going to snap a 5 day winning streak today, at least judging by futures. Major indexes are down, though not by much, led by the Nasdaq at about a 0.6% decline. Japan is leading Asia down, the Nikkei off about 1.3% today. Gold continues creeping higher, pushing near $1,300 again. Reportedly, China’s producer price index isn’t high enough and for some reason traders think steady prices is a bad thing. Rates are pretty steady globally, and Europe is mixed. The big moves will probably wait for next week as British Prime Minister Theresa May has her Brexit plan going through its final vote on Tuesday after being postponed back in December for lack of support.

Toyota Follows Ford in Recalling over 1M Vehicles Over Exploding Airbags

Toyota (NYSE:TM) is following Ford (NYSE:F) in recalling a whole bunch of cars and other vehicles, about 1.3 million due to the exploding Tekada airbag issue. The recalled vehicles include Lexus, Scion, and Toyota cars from 2010 to 2017. Here’s the interesting thing. Owners of these cars will receive notification of the recall only in a few weeks. In the meantime, they will be the proud owners of cars with airbags that could spray metal shrapnel into their faces if they happen to get into a car accident before they send their car in. So if you have one of these cars, maybe stop driving it. The issue is that the chemical released to inflate the airbag has become more volatile with age, meaning it might inflate the bag with too much force and the metal canister that releases the chemical could shatter, spewing fragments at the driver or passenger. Overall, the recalls including all affected companies the largest in US history.

Fed Lets the Dove Out of the Bag, Chased By the Cat

The Federal Reserve released its minutes for the December 18-19 meeting where they had hiked the effective federal funds rate by 25 basis points. Media is pointing to the softened language around future rate hikes, noting that even though the vote to raise the overnight rate was “unanimous”, several participants without voting privileges dissented. Officially, still, the Fed expects to hit “neutral”, whatever that means by the end of 2019. What neutral is however is completely subjective and impossible to determine without implementing basic judgment calls. It is mostly an ex post facto determination, meaning if recession occurs, the “neutral” rate will be the rate that was applicable when the economy was previously growing or not shrinking. Find the minutes here. They’re great material for parties, assuming nobody is sober.

Aramco to Open Books For First International Bond Sale Ever

Aramco is selling international bonds for the first time ever. The move is meant to finance its acquisition of petrochemical firm Sabic for $70 billion, which could be close to what Amazon CEO Jeff Bezos will have to pay for a divorce. It is probably going to be dollar denominated, though there has been no final decision yet. The important thing about the debt issuance is not necessarily that Aramco needs it, but that by doing so it will have to disclose its accounts to investors, exactly what it was trying to avoid by scrapping its IPO. Saudi Arabia has begun an audit of Aramco’s oil and gas reserves in order to get the debt issuance up and running. Stay tuned. We may find out how much oil Saudi Arabia has left, which could affect oil prices. (NYSEARCA:USO)

 

 

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