Different factors are contributing to the current sentiment on Wall Street. A large part of the recent rise in the wider market has been the consequence of serious buyback programs that were announced by different US companies. Economically that is not a strong sign, however.
It only proves that management teams do not see enough opportunity to invest. Next to that, the wave of takeovers is unstoppable. Companies with stunted growth trajectories are looking to buy it instead of creating it and the bull market stays on course as a consequence.
The US oil field services giant, Halliburton (HAL), took over Baker Hughes (BHI) for 34.60 billion dollars. A few days before it still seemed like the deal was not going through over the acquisition price. Halliburton is the number two in the US in that industry; Baker Hughes the number three.
Halliburton’s Acquisition Makes Wall Street Happy
Together both companies are about half the size of Schlumberger, the undisputed market leader, although the transaction still needs to be authorized by the proper authorities. Halliburton feels quite strongly, however. If the transaction fails it will take the bid up a notch.
Another big takeover that has been announced recently in the healthcare sector was the acquisition of botox producer Allergan by Actavis for 66 billion US dollars. With that the endless acquisition attempts of the Canadian pharma company Valeant will finally end.
Everything points in the direction of more takeovers and acquisitions for the foreseeable future. Wall Street keeps riding this bull market until the carrousel stops.
