HUM - Wall Street Breakfast Podcast: Cigna Humana Reportedly In Merger Talks

2023-11-30 06:39:55 ET

Summary

• Cigna and Humana are reportedly in talks to merge in a stock-and-cash deal.
• The United Auto Workers union is increasing unionization efforts at automakers, including Tesla, Rivian, and Lucid.
• Crude oil prices rise as OPEC+ considers new output cuts during their policy meeting.

Listen below or on the go on Apple Podcasts and Spotify

Cigna (CI), Humana ( HUM ) in talks to combine in stock-and-cash deal - WSJ (update). (00:24) The UAW goes electric with unionization efforts aimed at Tesla (TSLA), Rivian ( RIVN ) and Lucid (LCID). (01:35) Crude oil climbs as OPEC+ weighs new output cuts, with meeting set to start. (02:17)

This is an abridged transcript of the podcast.

Cigna (NYSE: CI ) and Humana (NYSE: HUM ) are in discussions to combine.

That’s the news from a WSJ report on Wednesday, which cited people familiar. The health insurers are talking about a stock-and-cash deal that could be completed by year end.

Cigna ( CI ) fell more than 8%, while Humana declined 5.5%. Competitors also saw declines. Molina ( MOH ) fell 2.9% and Elevance Health ( ELV ), formerly known as Anthem, declined 2.1%. CVS Health ( CVS ), which owns health insurer Aetna, dropped 3.5%.

Cigna ( CI ) has a market cap of about $84 billion, while Humana ( HUM ) is valued at $63 billion. Humana ( HUM ) is the No. 2 Medicare insurer after UnitedHealth ( UNH ), while Cigna's Medicare advantage is much smaller, according to the WSJ.

While the two companies are in talks, will the deal pass antitrust regulators is another question.

The United Auto Workers union is ramping up union organizing campaigns at more than a dozen automakers just a few weeks after working out new labor contracts with General Motors ( GM ), Ford Motor ( F ), and Stellantis ( STLA ).

The UAW set up a special website this week where workers can sign union cards online and get in touch with organizers. UAW President Shawn Fain noted strong response so far from workers, including from manufacturing plants in the U.S. South.

Automakers in the line of fire of the UAW unionization efforts include big sellers such as Toyota Motor ( TM ), Volkswagen AG ( OTCPK:VLKAF ), Nissan ( OTCPK:NSANY ) and Tesla (NASDAQ: TSLA ) - as well as electric-vehicle upstarts like Rivian Automotive (NASDAQ: RIVN ) and Lucid Group ( LCID ).

Crude oil futures gained Wednesday as OPEC and its allies reportedly are considering new oil production cuts of as much as 1M bbl/day, which could be announced today at the start of the cartel's high-stakes policy meeting.

Saudi Arabia, which unilaterally cut production by 1M bbl/day in June, favors further cuts, while top African producers Nigeria and Angola reportedly have been resisting a downgrade of their individual quotas.

Front-month Nymex crude ( CL1:COM ) for January delivery finished +1.9% to a two-week closing high $77.86/bbl, and front-month January Brent crude ( CO1:COM ) ended +1.7% to $83.10/bbl, its highest settlement value since November 6.

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On our catalyst watch for the day,

• Tesla ( TSLA ) will hold an event at the Gigafactory in Austin to mark the first official deliveries of the long-awaited Cybertruck. Tesla ( TSLA ) is targeting to produce 200,000 Cybertrucks per year, according to CEO Elon Musk. "I can't emphasize enough that manufacturing is much much harder than the initial design," noted Musk on the challenges of ramping up production.

Wall Street's major averages on Wednesday ended mixed.

The Nasdaq ( COMP.IND ) shed 0.16%. The S&P 500 ( SP500 ) slipped 0.09% while the Dow ( DJI ) eked out gains of 0.04%.

Of the 11 S&P sectors, six closed in positive territory, led by Real Estate and Financials. Communication Services topped the losers.

Treasury yields were lower after the GDP estimate, as traders snapped up bonds. The 10-year yield ( US10Y ) was down 7 basis points to 4.27%. The 2-year yield ( US2Y ) was down 9 basis points to 4.65%.

Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are in the green. The Dow is up 0.5%, the S & P 500 is up 0.2% and the Nasdaq is up 0.2%. Crude oil is up 2.3% at more than $79 per barrel. Bitcoin is down 1.2% and above $37,000.

In the world markets, the FTSE 100 is up 0.5% and the DAX is up 0.3%.

The biggest movers for the day premarket: Salesforce (NYSE: CRM ) is up 8.9% on upbeat Q3 earnings results and the Q4 forecast. And despite topping expectations in Q3, Pure Storage (NYSE: PSTG ) is down 16% as its outlook fell short of consensus .

On today’s economic calendar:

• 9:45 am the Fed’s John Williams will give the keynote address at the Bretton Woods Committee’s “Exploring Innovations in Central Banking” conference

• 10 am pending home sales

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