The minutes from the Federal Open Market Committee’s December meeting were released, showing the board’s reluctance to increase interest rates amid weakening inflationary pressures and slowing global growth. The Bureau of Labor statistics furthered this point when releasing its December Consumer Price Index, which revealed the first monthly decrease in prices in nine months. The inflationary gauge did rise on an annualized basis, albeit slower than in prior months. Also, unemployment insurance claims fell unexpectedly in the first week of the new year.
According to preliminary data supplied by Pitchbook, there were 24 M&A deals this last week, totaling $9.31 billion in deal spending. The largest announced transaction of the week was Eli Lilly’s buyout of publicly traded Loxo Oncology for $8 billion.
Saudi Aramco is again searching for ways to raise money in an IPO. Saudi Arabia’s energy minister says the long-delayed IPO will take place in 2021. The Kingdom released the results of an independent audit of their oil reserves last week, showing they control 260 billion barrels in oil reserves. Since the inception of Aramco’s IPO idea, the plans have been critiqued for not being transparent enough. Experts suggest these metrics are a first step to revealing enough about the company to potential investors.
Two surveys on U.S. manufacturing activity suggest a dramatic slowdown in the sector. HIS Markit’s manufacturing PMI revealed a subtle 1.5-point drop to a 15-month low, while the Institute for Supply Management’s PMI experienced a one-month decline of 5.2 points, the greatest in 10 years. Despite waning manufacturing activity, the job market experienced an unexpected surge as 312,000 jobs were added, 136,000 more than expected, while the unemployment rate rose slightly and wage gains posted a nine-year higher.
According to preliminary data supplied by Pitchbook, there were twelve M&A deals in the first week of the new year, totaling $80.97 billion. However, almost all of that value comes from Bristol-Myers Squibb’s $79.3-billion buyout of cancer and anti-inflammatory medication maker Celgene.
In the first week of 2019, no new firms completed initial public offerings on U.S. exchanges, likely a result of the government shutdown and continued market volatility. However, the new year did bring news to IPO markets. Esports community Super League Gaming has submitted its registration for an IPO on the Nasdaq market. One of the most recognizable brands for amateur gamers, the company connects gamers and venues across cloud-based networks. Super League Gaming also boasts a handful of partnerships with major game publishers. The company seeks a $25-million market offering.
The stock market ended deeply negative in December, with the S&P 500, Dow Jones Industrial Average (DJIA), NASDAQ, and Russell 2000 each losing over 8%. The worst market performance in December since 1931 sent the S&P 500, DJIA, and NASDAQ into negative territory for the year, with the S&P 500 down 6.2%, the DJIA down 5.6%, and NASDAQ down 3.9%. The Russell 2000 was down 12.2% in 2018. The year accounted for the worst market performance since 2008.
According to CNN Business and Mastercard SpendingPulse, year-over-year U.S. holiday spending grew at its fastest rate in six years. From November through Christmas Eve, Americans spent just more than $850 million, a 5.1% increase from the 2017 holidays. E-commerce sales also surged, with 19.1% more sales than in 2017. In fact, within the last year, mobile e-commerce holiday sales grew 57% from 2017 and in-store pickup sales grew 47%.
Initial claims for unemployment benefits fell by a marginal amount last week, continuing a downward trend towards the 49-year low set in September. Chicago’s manufacturing activity slowed last month, although only slightly, due to slip-ups in new orders, employment and supplier deliveries indices. The Conference Board’s December consumer confidence index revealed a sharply lower measure from November, as market volatility and lower economic growth expectations alarm consumers.
According to Pitchbook, there were five M&A deals during the holiday week, worth a total of $1.92 billion. The largest of the five deals was Vista Equity Partners’ $1.9-billion LBO of Mindbody, which develops business management software for fitness facilities.