SFT - Wall Street Breakfast Podcast: Oil Prices Pop

2023-10-09 06:48:53 ET

Summary

• Crude oil and gold futures rise in response to the Israel-Hamas conflict.
• Analysts expect limited gains in crude oil prices unless the conflict escalates into a regional war.
• Bristol-Myers Squibb agrees to acquire Mirati Therapeutics for $4.8 billion.

Listen below or on the go on Apple Podcasts and Spotify

Oil prices pop after Hamas attack on Israel but analysts foresee limited gains. (00:26) Trian's Peltz plans new push for board seats at Disney (DIS)- report. (01:49) Bristol-Myers Squibb ( BMY ) to acquire Mirati Therapeutics ( MRTX ) for $4.8B. (02:44)

This is an abridged transcript of the podcast.

Crude oil and gold futures are higher in response to the Hamas attack on Israel .

The war has caused the death of at least 700 Israelis so far, more than 1,100 on both sides of the conflict, and the abduction of dozens of Israeli citizens and soldiers.

As of 5am, WTI November crude oil ( CL1:COM ) +3.5% to $85.73/bbl, and December Brent crude ( CO1:COM ) +2.9% to $87.00/bbl, while December Comex gold ( XAUUSD:CUR ) +1% to $1,850.64/oz.

Analysts generally expect a " knee-jerk surge " in crude prices but limited gains thereafter, provided the conflict does not expand into a regional war - which is far from certain, since the fighting is on the doorstep of an important oil-producing and exporting region.

If Iranian involvement in the attack is affirmed, the U.S. could increase enforcement of sanctions on Iran's crude exports, which recently have moved back toward pre-2018 levels.

Saudi Arabia is not expected to slow oil production in solidarity with the Palestinians, but the war could derail normalization talks and cancel any additional Saudi oil flows that may have resulted.

But if Israel were to strike any Iranian infrastructure, crude oil prices would spike immediately on the perceived risk of a disruption.

Analysts also say the conflict could cause buying in perceived safe-haven assets like gold and the dollar, and potentially boost demand for U.S. Treasuries.

Bristol-Myers Squibb (NYSE: BMY ) agreed to purchase cancer drug maker Mirati Therapeutics (NASDAQ: MRTX ) for about $4.8 billion.

According to a statement on Sunday, the agreement is for $58.00 per share in cash, for a total equity value of $4.8 billion. Mirati ( MRTX ) holders will also receive one non-tradeable Contingent Value Right for each Mirati share held, potentially worth $12.00 per share in cash, representing an additional $1 billion of value.

The takeover comes after Mirati ( MRTX ) shares surged 45% on Thursday amid a Bloomberg report that suggested the company may be a takeover target.

Mirati ( MRTX ) shares closed at $60.20 on Friday.

The acquisition is expected to close by the first half of next year, subject to customary closing conditions. Bristol-Myers ( BMY ) expects to finance the acquisition with a combination of cash and debt.

Activist investor Nelson Peltz is planning to push for board seats at Disney (NYSE: DIS ) once again.

According to the Wall Street Journal citing unnamed sources, Peltz's Trian Fund Management, one of Disney's ( DIS ) largest shareholders with an over $2.5B stake, is expected to request multiple seats, including one for Peltz.

If Disney ( DIS ) does not agree, the hedge fund may nominate directors at the company's annual meeting next spring. Nominations can be submitted from December 5 till January 4.

The WSJ reported that Trian believes Disney's ( DIS ) shares are significantly undervalued and the company needs a board that is more accountable and aligned with shareholders.

Peltz previously tried to run for a seat on Disney's ( DIS ) board, following the company's rejection of his request to become a director.

He withdrew his nomination after Disney ( DIS ) announced major cost cuts .

However, Disney ( DIS ) shares dropped ~25% since Peltz ended his proxy fight, and even notched their lowest level in a decade.

Disney ( DIS ) has been faced with a host of challenges, including the Hollywood strikes that froze production, and continued losses at its TV and streaming units.

Other headlines to look out for on Seeking Alpha:

Birkenstock IPO likely to price at top end of range - report

Tesla headwinds include a sales deceleration in China and price cuts in the U.S.

Citigroup to sell China consumer wealth portfolio to HSBC

On our catalyst watch for the day,

• The quiet period ends on Arm Holdings ( ARM ) to free up analysts to post ratings.

• Birkenstock ( BIRK ) is expected to price its IPO and start trading this week.

Major market averages rallied higher and finished in the green on Friday after faltering early on as Wall Street received the latest round of payrolls figures.

For the session, the Nasdaq ( COMP.IND ) closed higher by 1.6%, the S&P 500 ( SP500 ) advanced by 1.18%, and the Dow ( DJI ) finished on top by 0.87%.

Furthermore, 10 of the 11 S&P 500 sectors were able to conclude trading higher on Friday with Tech and Communications leading the way. The only segment to end the session in the red was the Consumer Staples sector.

For the week, the Nasdaq ended up on top by 1.6%, and the S&P 500 picked up 0.4%, while the Dow finished lower by 0.3%.

The September jobs report surged past consensus in September. For an analysis of the numbers checkout Friday’s edition of Wall Street Lunch with Kim Khan.

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 red. The Dow is down 0.4%, the S&P 500 is down 0.5% and the Nasdaq is down 0.7%. Bitcoin is down 1%.

Bond markets are closed for Columbus Day.

In the world markets, the FTSE 100 is up 0.3% and the DAX is down 0.5%. And the market in Japan is closed for a holiday. In Hong Kong the market is open for a half-day.

The biggest stock movers for the day premarket: Shift Technologies (NASDAQ: SFT ) is down more than 85% after the company and its subsidiaries announced intention to file a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code to wind down its business.

On today’s economic calendar, at 9 am the Fed’s Lorie Logan will speak about the U.S. economy and monetary policy at the annual meeting of the National Association for Business Economics.

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