The Japanese Market Plunges

There have been some high-profile buyouts lately. Yesterday, Apollo Tyres of India said it’s buying Cooper Tire & Rubber ($CTB) for $2.5 billion, or $35 per share. Despite being a 43% premium, I still think they’re getting a good deal.

Today we learned that Safeway ($SWY) is selling all of its Canadian stores to Sobeys for $5.7 billion. The deal leaves Safeway with about 1,400 stores that are mostly based in the Western U.S. The stock has gapped up about 17% this morning. Unfortunately, I think the jump in SWY takes away any compelling buying opportunity.

The volatility in the Japanese market is reaching extreme levels. The Nikkei dropped -843 points today which was a loss of -6.35%. Even after the recent losses, the market in Japan has done incredibly well since late last year. There are now concerns that the government isn’t fully committed to the policy of inflating consumer prices. The yen has strengthened considerably against the dollar over the few weeks, which in turn has been good for AFLAC ($AFL).

The government reported that initial jobless claims fell to 334,000 last week. We’re very close to the best report in years. In late April, we had 327,000 followed by 328,000 the next week. That was the lowest since 2007.

Posted by Eddy Elfenbein on June 13th, 2013 at 10:08 am

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