Stocks React to the Jobs and Inflation Data 12/8/23
Dec 8, 2023
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Jenny Harrington and Steve Weiss debate on retail. Joe sells shares in JPMorgan, Uber, and Broadcom. Jim Lebenthal discusses Paramount’s pop on potential takeover.
The market's reaction to jobs and inflation data is being closely watched ahead of the next Fed meeting.
Morgan Stanley downgraded Qualcomm and Lamb Research, indicating a shift in their views on the semiconductor industry.
Paramount's stock price is rising due to speculation of potential mergers and acquisitions, driven by strong operational results.
Deep dives
Honeywell to Acquire Carrier's Security Business for $5 Billion
Honeywell has announced plans to acquire Carrier Global's security business for approximately $5 billion. This move will allow Carrier to focus on its HVAC growth and pay down debt with the proceeds. The deal values Carrier's security unit at a multiple of 17 times EBITDA, indicating that Carrier's valuation is below the market average. With solid earnings growth expected for Carrier in the coming years, this acquisition highlights the undervalued nature of the company.
Qualcomm Downgraded to Equal Weight
Morgan Stanley has downgraded Qualcomm from overweight to equal weight, citing that the stock has hit its price target. The downgrade comes as Qualcomm's smartphone exposure is shifting from defense to offense, indicating that the smartphone market is becoming more competitive. The downgrade does not diminish the positive outlook for Qualcomm's cash flow and acquisition potential in the driver applications sector.
Lamb Research Downgraded to Equal Weight
Morgan Stanley has downgraded Lamb Research from overweight to equal weight due to a shift in view on the semiconductor capital equipment industry from in line to cautious. This downgrade is attributed to a perceived moderation in growth and the potential difficulty of achieving strong comparables going forward. The market response to the downgrade indicates that the semiconductor equipment cycle may have reached a temporary ceiling.
Transocean's prospects in the offshore drilling market remain strong, despite a recent downturn in oil prices. The company's focus on the offshore sector positions it as a leader in the industry, with a significant portion of its fleet ready for deployment. The acquisition of offshore drilling rigs is in high demand, and Transocean is expected to play a key role in meeting this demand.
Paramount's Rally Continues Amid M&A Speculation
Paramount shares continue to rise, driven by market speculation of potential mergers and acquisitions (M&A) involving the company. The current rally in Paramount's stock price reflects increasing interest and positive sentiment from investors. The potential M&A activity and strong operational results have contributed to the recent significant upward momentum of Paramount shares.
Scott Wapner and the Investment Committee kick off today’s debate by digging into the market’s reaction to jobs and inflation data ahead of the next Fed meeting. Jenny Harrington and Steve Weiss have the bull/bear debate on retail, Joe sells half of his shares in JPMorgan, Uber and Broadcom, and Jim Lebenthal discusses Paramount’s pop on the back of a potential takeover.
