In the first quarter the markets were obsessed with the brutal winter weather. Now in the second quarter, the markets are obsessed with the battle of wills and words between Russian President Vladimir Putin and the USA and Europe. What this does is to feed the fear factor of traders and obfuscates the positive aspects of the market such as strong first quarter earnings and increasing merger and acquisition activity. Those strong first quarter earnings have put the winter weather worries to rest.
Mergers & Acquisitions Will Fuel Next Leg of Bull Market
Speaking of merger and acquisitions, this morning, Pfizer (PFE) proposed purchasing the United Kingdom’s AstraZeneca (AZN) for nearly $100 billion. Furthermore, General Electric (GE) is not giving up on its desire to purchase France’s Alstom. Not only has Siemen’s apparently gotten into the fray but GE Chairman Jeff Immelt met directly with France’s President Hollande this weekend to discuss the proposal. So while the market might be fretting about the level of social networking and tech IPOs that have recently hit the market; rest assured that more stock is coming out of the market as acquisition activity has heated up. As stock comes out of the market, cash comes in. That cash will then buy shares of other companies’ stock feeding another round of bullish activity.
Apple Set to Make New High
After another ugly tech market on Friday, the merger and acquisition activity is taking attention away from Putin and futures are indicated higher. Apple (APPL) after reporting strong earnings last week is back on track and could make a new 52-week high today. I think once Apple hits $600 it will begin to attract momentum buyers again and could rise to an all-time high. As it now stands, Apple is only up about 2% for the year.
On Friday, I went to the New York International Auto Show after which I appeared on Bloomberg Radio with Carol Massar and Pimm Fox. A podcast of the show will be loaded to the LakeView Asset Management website later today and I will provide a link tomorrow.
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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL — although positions can change at any time.
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Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
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