Morning Toast 12 December
As the week begins, the S&P 500 reaches its peak for the year, propelled by a robust jobs report on Friday. This positive employment data indicates that the Federal Reserve may navigate a "soft landing," effectively returning inflation to normal levels without triggering an economic recession. Notably, both the S&P and Dow have marked gains for six consecutive weeks, achieving their lengthiest winning streak since 2019.
OCCIDENTAL: Strategic Integration in the Energy Sector
In a strategic manoeuvre, Occidental Petroleum has successfully concluded its plans to acquire CrownRock, a prominent energy company deeply entrenched in the Permian Basin, in a substantial $12 billion transaction. This acquisition aligns with the prevailing trend of mergers within the American energy landscape, particularly emphasizing the Permian, recognized as the most prolific oil production region in the United States. The anticipated closing of this deal is slated for the first quarter of 2024.
CrownRock has played a pivotal role in advancing a significant 100,000-acre expanse in the Midland Basin, a crucial segment of the Permian spanning 20 counties in Texas. In 2020, this area contributed to 15% of the nation's crude oil production, according to data from the U.S. Energy Information Agency.
To facilitate this strategic acquisition, Occidental plans to issue $9.1 billion in debt and generate approximately $1.7 billion through the sale of common stock. Concurrently, Occidental has revealed its intention to elevate its quarterly dividend, raising it from 18 cents to 22 cents per share, effective from the coming year.
MACY’S: Strategic Move to Unlock Real Estate Value
Arkhouse Management and Brigade Capital Management have presented a proposal for the acquisition of Macy’s, valuing the retail giant at $5.8 billion.
The proposed bid sets Macy’s value at $21 per share, a notable premium considering Macy’s stock closed just above $17 per share on Friday.
Arkhouse Management, specializing in real estate investments, and Brigade Capital Management, a firm with expertise in asset management, have expressed a willingness to revise their offer after conducting thorough due diligence.
This initial offer already signifies an elevated value for the department store chain, which has been grappling with challenges in the face of stiff competition from online retailers.
It is speculated that both firms are particularly interested in Macy’s real estate and intellectual property assets rather than the traditional brick-and-mortar retail operations.
UN Chief's Urgent Appeal at COP28: 'Time for Phasing Out Fossil Fuels'
On Monday, UN Secretary-General António Guterres delivered a compelling call for action at COP28, urging negotiators to secure a deal on the gradual phaseout of fossil fuels. Guterres emphasized the critical moment, stating, "now is the time for maximum ambition and maximum flexibility" as the UN climate talks in Dubai approached their conclusion.
With only 48 hours left in COP28, the UN chief emphasized the need for an ambitious outcome that showcases decisive action and a credible plan to preserve the 1.5-degree goal, safeguarding those most affected by the climate crisis.
As negotiators engaged in intense discussions covering crucial agenda items such as the future use of fossil fuels, the expansion of renewable energy, climate change resilience, and financial support for vulnerable nations, Guterres highlighted the urgency of the situation. He warned that the planet is "minutes to midnight" regarding the 1.5-degree limit outlined in the 2015 Paris Agreement, emphasizing the ticking clock.
Despite COP28 nearing its end, Guterres acknowledged a lingering gap that must be bridged, calling for maximum ambition and flexibility. He urged ministers and negotiators to transcend arbitrary red lines, entrenched positions, and blocking tactics.
In urging countries to enter "overdrive" and negotiate in good faith while rising to the challenge, the Secretary-General emphasized that any compromise must not come at the expense of compromising on science or the imperative for the highest ambition. He underscored the potential of COP28, even in a "fractured and divided world," to demonstrate that multilateralism remains the best approach to tackle global challenges.
Quote Of The Day
"Fossil fuels are not only bad for the environment, they are also a threat to our security. We need to break free from our dependence on these dirty fuels and invest in clean energy solutions." - Bill McKibben
Investing involves risk. You aren't guaranteed to make money, and you might lose the money you start with.
Douugh Australia Pty Ltd ABN 76 617 000 138 operates under Douugh Australia Pty Ltd AFS License No. 500063. Although we endeavour to ensure the accuracy of information we provide, we do not accept responsibility of liability for any errors or from any loss from its use. Any information provided is general advice only and has been prepared without considering your objectives, financial situation or needs. We don't provide personalised advice or recommendations. Before making any investment decision you should consider whether it is appropriate for your situation and seek appropriate taxation and legal advice. For more details, see our FSG, Terms of Service and other disclosures.
Stay informed with the Morning Toast
Save time with curated and delivered financial news and insights.