Mar 23-27: Merger mania

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Products from Kraft Foods, above, and Heinz sauces, below. With price being kept down as Kraft executives fight lower margins and flat sales amid changing tastes of consumers, 3G Capital and Berkshire Hathaway saw value to unlock in combining the two historic companies.

$28 billion

Approximate annual sales of a merged Heinz and Kraft foods company. With a market valuation north of $80 billion, the new company will be one of the largest standalone food companies in the world. Eight brands in the combined company have +$1 billion in sales, while 5 others have between $500 million and $1 billion in sales.

NOTE: If paywalled, search article title and access from Google

Kraft and Heinz to merge in deal backed by Buffett and 3G Capital, NYT Dealbook

Jorge Paulo Lemann and Warren Buffett have come together on yet another food & beverage deal, creating one of the world's biggest F&B companies with the merger of Kraft and Heinz--this year's largest merger so far. With complimentary product lines--imagine Heinz mustard and Oscar Meyer hot dogs--analysts expect the company to use Heinz's global footprint to expand Kraft sales beyond North America.

Dow Chemical (DOW) to separate chlor-alkali unit, merge it with Olin (OLN), Street Insider

Divesting itself of a chlor-alkali business that many analysts suggest was making performance track very closely with that of oil's in recent months, Dow is streamlining itself from a strategic and tax standpoint while Olin projects being able to unlock $200 million in synergies from the merger in the next 36 months.

Oil prices rise as dollar weakens, WSJ

An industry newsletter attributed 87% of the move in US oil prices since Thanksgiving to the move in the dollar, noting "the Federal Reserve will have as much of a role as Tehran and Riyadh" in determining oil prices. Oil is traded in dollars, so a drop in the dollar's value makes oil less expensive to buyers using foreign currencies.

Bank of China posts slower profit growth amid rising bad loans, WSJ
Bank of China's net profit rose 8% in 2014, to 169 billion yuan ($27 billion), thanks to higher interest and fee income. As compared to global growth numbers, these relatively-robust metrics represent the slowest annual growth BOC has experienced since going public in 2006. China Agricultural Bank also listed its lowest numbers since going public in 2010. Allowances for nonperforming loans was 187% of total loan losses in 2014, down from 229% a year earlier.

Google hies Morgan Stanley's Ruth Porat as new CFO, TechCrunch
Behind David Viniar at Goldman Sachs, Ruth Porat is one of the longest-standing big bank executives remaining at the same firm, having worked at MS continuously since 1987. The former head of Technology Investment Banking and California native's defection to the tech ranks is yet another suggestion of the rising significance of the technology sector in the modern US economy.

Vocabulary & People:

• NPLs
• CFO
• David Viniar
• Ruth Porat
• Jorge Paolo Lemann

Calendar:

• Mo Mar 30: Pending home sales, Fed mfg survey
• Tu Mar 31: S&P Case-Shiller EPI, Consumer confidence
• We Apr 1: ADP employment, PMI Mfg, Construction spending
• Th Apr 2: International trade, Jobless claims
• Fr Apr 3: Employment situation

Predictions from last week: 1/3 All-Time: 18/33

• Lululemon misses: WRONG
• Another president candidate: WRONG
• Consumer confidence up: CORRECT

Weekly Predictions: gathered at conclusion of weekly meeting

1. Increasing trade imbalance
2. Rising consumer confidence
3. Strong employment numbers Friday

Participants: J. O'Brien, R. Niu, S. Shah, K. Meenan

Feb 16-20: DuPont getting peltzed

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Trian Fund Management founding partner Nelson Peltz is accusing DuPont CEO Ellen Kullman and her staff of not doing enough internally to better unlock value for shareholders.

67%

Percent over and above S&P 500 returns that DuPont stock has returned to shareholders since 2009.

Peltz's Firm, DuPont Trade Salvos, WSJ

Nelson Peltz's activist hedge fund, Trian, which already owns a 2.7% stake in DuPont, is pursuing 4 seats on DuPont's board. The US-based materials and chemicals company has been doing well recently, but Peltz insists that Trian's guidance is the leadership for outperformance--not the leadership of CEO Ellen Kullman. Peltz insists there is yet more value to unlock for shareholders.

Currency Wars: Pandering to Debase, Seeking Alpha

Tim Edwards walks through the decision-making of fictional country Atlantis: should they or should they not debase their currency? On the one hand, austerity measures aren't popular with their citizens, and stimulus would be exciting for equity investors while debt should become suddenly cheaper (in dollar terms). On the downside is the specter of inflation. What to do?

Aggregate Income Shows Consumers Ready To Take Growth Baton, Bloomberg Briefs

Economist Carl Riccadonna looks at last week's employment report and more specifically aggregate income to see if US consumers are ready to keep spending. While some pundits cite manufacturing and industrial production specifically in energy as the reason for the US' gradual recovery from crisis, there are signs that a consumption-driven surge may be on the way--or is already here.

Apple: $710 Billion and Counting, WSJ
The eye-catching graphic on the article's front page pretty much sums up the buzz: AAPL's market price is now 2 times Google's, 2.5 times Walmart's, 4 times Bank of America's, 8 times McDonald's, 12 times GM's, and 24 times Twitter's. Tim Cook cited high demand for iPhones in China as one reason for the explosion in value. Carl Icahn is calling for a valuation in excess of $1 trillion.

Convertibles Stay Hot, WSJ
US-listed convertible bond deal volume has jumped 49% since this time last year, totaling $5.7 billion. Convertible bonds get their name from paying their investors interest, like a bond, until they are converted into the company's stock at a certain predetermined strike price--much like an option. The spike in volume is attributed to low interest rates and bullishness in stocks.

Vocabulary: gathered throughout meeting, definitions from www.investopedia.com

• Convertible bond http://www.investopedia.com/terms/c/convertiblebond.asp
• Delinquent http://www.investopedia.com/terms/d/delinquent.asp
• Volatility http://www.investopedia.com/terms/v/volatility.asp
• PMI Manufacturing index http://www.investopedia.com/terms/p/pmi.asp

Calendar: from Barron's, Nasdaq Economic Calendar

• Monday: (President's Day)
• Tuesday: Empire State manufacturing survey, Housing market index; FOSL, FDP, JACK, TAXI, GT, VNO, WM
• Wednesday: Housing starts, PPI, Industrial production, FOMC minutes; ACT, ANGI, CAR, DENN, HLT, MAR
• Thursday: Jobless claims, Philly Fed survey; DTV, EQIX, INTU, LLC, PSA, TMUS, TRUE, WMT
• Friday: PMI Manufacturing index; DE

Predictions from last week: 3/3 All-Time: 10/15

• US import prices fall: CORRECT
• Zoetis beats: CORRECT
• Oil rallies: CORRECT

Weekly Predictions: gathered at conclusion of weekly meeting

1. Chinese yuan will weaken against the US dollar
2. Dow & S&P will continue record highs as Greece signals acceptance of some of EU's austerity program
3. PMI Manufacturing will indicate expansion (score of 50 or more)

Participants: T. Aygun, K. Meenan