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PreMarket Prep Recap: Chuck Talks To TD Ameritrade, Macy's Wins The Retail Limbo

Joel Elconin

Some deals on Wall Street are rumored and come to fruition, while others come out of the blue and shock everyone. On today's PreMarket Prep Show, reports of the potential acquisition of TD Ameritrade (NASDAQ:AMTD) by Charles Schwab (NASDAQ: SCHW) was scrutinized at the top of the show.

Cannibalize The Industry?

To co-host Dennis Dick, this deal and price action make no sense at all from an investor standpoint. Certainly the synergies are there for the two companies, but what's puzzling to him is why would investors pay more for Charles Schwab or the combined companies than they would before commissions were eliminated?

Obviously he's not the only one asking this question. Both stocks opened at their highs for the session, had steep declines and now are on the rebound.

Low Bar Not Low Enough For Macy's To Clear

Based on a few of the other retailers that delivered disappointing earnings so far, Macy's (NYSE: M) didn't have high expectations to meet to instigate a rally. One would think if they said anything positive, it may rally.

That didn't turn out to be the case, as the company missed EPS estimates by 18 cents along with a slight miss for sales. Comps at owned stores was down 3.5%.

Although the issue dipped under $14 in pre-market trading, investors were alerted that the issue had bottomed in the lower $14 handle several times since August. Those same buyers were lurking after its lower open that took the issue to $14.30 and reversed course. The ensuing took the issue to $15.22, but is now consolidating in the upper $14 handle.

Do Not Pay More Than The Current Take-Out Price For Tiffany

When it was first announced on Oct. 25 that Louis Vuitton (OTC: LVMHF) wanted to acquire Tiffany Co. (NYSE: TIF) at $120 a share, the Street signaled the price was too low. On the trading day following the announcement, Tiffany traded as high as $130.40 and the ensuing retreat off that level never went lower than $122.12, which happened in Wednesday's session.

After the close on Wednesday, Reuters reported the offer has been raised to $130 a share. That induced a spike to $131.87 in the after-hours session. Although it may take more than $130/share to get the deal done, speculating that it will happen and paying nearly $2 over that price was discouraged.

There still appears to be some skepticism the deal will get done at $130 as the issue peaked at $127.53 in today's session. It should be noted that is nearly $3 lower than the high on the day the deal was announced.

Mark Yusko Joins The Show

Midway through the broadcast, Mark Yusko, CEO & CIO Of Morgan Creek Management joined the broadcast. Mark provided commentary on overall market, Bitcoin and the potential opportunity in the energy sector.

On Friday's show, John Inch, Senior Analyst at Gordon-Haskett will be our guest to discuss issues in the industrial sector.


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