No rest for the weary.
If Fridays are now the most boring day of the week for investors, then Mondays are definitely the most exciting ... and mentally draining. With public companies fully aware that newsrooms are looking for content to kick off their weeks on a strong note, why not stuff the biggest news in their lifetimes inside of a span of 12 hours (Sunday night into Monday)?. Hat tip to the dopes in communications who think this is a good idea -- it all risks losing the message behind a company's key news.
Nevertheless, Monday is already proving to be nuts. The T-Mobile (TMUS - Get Report) merger with Sprint (S - Get Report) was being as well-received by the market as Michelle Wolf's jokes were at the White House Correspondents Dinner on Saturday. Sprint's stock was down almost 8% in premarket trading while T-Mobile was fractionally lower. Make no mistake, T-Mobile CEO John Legere did one hell of a sales job on a Sunday afternoon conference call with analysts and Twitter fans. It was rather evident from the call that Legere played a key role in crafting the America first press release announcing the deal.
Although the deal makes a great deal of sense, the market is concerned about two things: (1) Whether the Trump administration will give its blessing on the deal; (2) and if the Trump administration doesn't pass the deal, then T-Mobile and Sprint have opened themselves up to attacks by Wall Street about how they won't be able to invest accordingly to support 5G on their own. Don't bet against Legere, he is a heck of a marketer that will take his gifts straight to Washington to close this one.
One transaction that doesn't need any marketing is Walmart's (WMT - Get Report) unloading of U.K.'s Asda to J Sainsbury's. Asda has been a terrible business for Walmart in recent years as Lidl and Aldi have run over the company. Good to see Walmart realizing it can't win in the U.K., snagging some cash, and focusing its efforts to beating back Amazon (AMZN - Get Report) in the U.S. Next market for Walmart to exit: the very competitive Brazil.
We have seen this game before: The bears pound Apple's (AAPL - Get Report) stock into the ground ahead of an earnings report. Then Apple reports a big earnings number and the stock rips 15% higher over the ensuring four weeks. Such is the setup ahead of Apple's earnings report on Tuesday, with shares down about 3% in one month's time on fears of weak iPhone X demand. TheStreet's Eric Jhonsa has an in-depth preview here on Apple.
While analysts have justification to be cautious on Apple into the report, the sky isn't falling at the tech giant. In fact, the market is totally forgetting Apple will unveil its capital allocation strategy on Tuesday, and it could be a nice positive to the stock. "We think AAPL's solid free cash flow (FCF) and $163 billion net cash balance will result in a meaningful step-up in capital allocation next quarter. AAPL is likely to maintain a mix between buyback & dividends while keeping some cash for possible deals. AAPL could target incremental $25 billion + buybacks (above repurchases using FCF), implying total share reduction over the next 5 years could be ~1.6 million shares (31% share reduction in total, ~7% annually)," says RBC Capital Markets analyst Amit Daryanani.
Apple is a holding in Jim Cramer's Action Alerts PLUS.
You Must Be Here
I will continue to promote TheStreet's "Investor Boot Camp" conference coming up on May 5 until you sign up. The entire team here at TheStreet has been carefully planning this event for months, and I can tell you everyone in attendance will come away with a wealth of knowledge on investing that can't be found anywhere else. It will be that good, trust me. Learn more here.