Over
the weekend, investors continued their focus on the American economy. This is
after the latest jobs data came better than expected for a second month in a row.
The numbers from the Labor Department showed that the economy created more than
322k jobs in January after adding more than 300k jobs in December. The strong
number that came after the Fed paused on further rate hikes was an important
one because it means that the Fed will likely change its mind in the coming
months. It also means that the US is still better than the other countries like
China and EU that are seeing a deceleration.
Focus
also remained in Venezuela, the oil-rich Latin American country. Demonstrations
against the Maduro regime continued as the population continued to revolt
against a regime that has made it the laughing stock of the world. This is because
of the vast amount of oil that the country has. To investors, Venezuela is at a
critical juncture because the United States has continued to recognize the
leader of parliament as the legitimate president. This is despite the fact that
he did not win any election. Another issue is that China continues to have a
lot of influence in the country. After defaulting on Chinese debt, the country
took control of 28% of the oil. Investors will continue to pay attention to
this issue.
Deutsche
Bank was another focus this weekend. Wall Street Journal published a number of
articles about the struggling German bank. The journal revealed that the bank
had loaned Russian bank VTB more than $600 million. The article tried to link
this issue to the fact that Donald Trump had tried to build a tower in Moscow.
Further, another article tried to make the case of the bank’s close
relationship with Trump. Democrats, who control congress are starting to
investigate the bank and it’s relationship with Trump. This could lead to
subpoenas, which may lead to more trouble. Just last week, an article by
Bloomberg said that the bank was considering merging with Commerzbank later
this year. In recent years, the bank has struggled with declining revenues,
talent drain, and lack of confidence by the market.
In
the United States, activist investor Starboard Value announced that it had
taken a considerable stake in Bristol-Meyers. The fund is run by Jeff Smith, an
activist who advocates for radical changes in companies he invests in. This is
big news for traders and investors because the company had recently announced
its plan to buy Centene. The combination will create a behemoth in the cancer
industry. There is a likelihood that the investor will reject the merger or
pressure Bristol to sell itself to a larger company. This action may create
immense value to investors who focus on merger arbitrage. It also means that
banks may continue to receive money for merger transactions.
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