Morning Minutes

Big US Media Merger; Canada Housing Starts Slow



The US communications sector has been rocked this morning by the news of a large merger in the sector with the potential to create a new content giant with a combined 79 million US streaming subscribers. AT&T announced that it is merging its WarnerMedia division to Discovery Communications in a $43B cash, stock and debt deal that will give AT&T shareholders 71% of the new combined, independent media company. On the news, Discovery is up 13.0% premarket while AT&T is up 3.1% premarket suggesting that investors see this deal as beneficial for both companies. Meanwhile competitors Disney and Netflix are down slightly in premarket action.

Its otherwise a quiet morning for corporate news. The main part of earnings season in North America is now over, but this week does bring results from senior US retailers starting with Walmart, Home Depot and Macys tomorrow.   

In economic news, Canada reported a deeper than expected plunge in April housing starts (269K vs street 293K and previous 335K) as new lockdowns took hold. The US Empire State manufacturing survey (24.3 vs street 23.9 and previous 26.3) slipped a bit from last month but was better than the street had expected. Outside of housing numbers, this week is relatively quiet for economic news until flash PMI reports come out on Friday.

The new trading week finds markets around the world giving back Friday’s gains and resuming the downward course seen in the early part of last week. The three main US index futures contracts are all down 0.5%-0.6% this morning, giving back some of Friday’s gains of 1.0% for the Dow, 1.5% for the S&P and 2.3% for the NASDAQ. European markets are also sliding this morning with the FTSE falling 0.6% and the Dax down 0.3%. Commodity action is mixed with WTI crude oil down 0.5% but copper up 0.3%. Gold is up 0.5%, while Bitcoin is down 0.2% trading near $45,000.  

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Colin Cieszynski, Chief Market Strategist

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