Double Dip Fears Return
While talk of a double dip in the recovery of the American economy had died down somewhat, economists surveyed by CNN who had previously been fairly upbeat about economic recovery, have cut their second quarter growth forecasts, with some revising full year estimates as well. The disappointing May jobs report, along with poor consumer spending, dismal home values and gloomy manufacturing statistics, is seen as an indication that the road to recovery has hit a detour. It didn’t help matters that up to 29,000 of the job cuts were made by the US government. Moreover, the fact that the US economy is in a fragile state, makes it more susceptible to negative effects from outside influences, such as the instability in the Middle East.
As Wall Street heads into a new week, market activity includes the proposed purchase of Timberland Co (NYSE: TBL) by Wrangler manufacturer VF Corp (NYSE: VFC) for $43 per share. The joining of the two companies will result in an apparel and footwear company worth $10 billion. In other corporate news Wendy’s/Arby’s Group (NYSE: WEN) has entered into an agreement with a private equity group to sell Arby’s, and Honeywell International (NYSE: HON) revealed its intentions to purchase EMS Technologies (NASDAQ: ELMG) for a cash price of $491 million.
In the banking sector, the news that New York Attorney General Eric Schneiderman was launching a new investigation into the mortgage securities and foreclosures business of Bank of America failed to deter investors as its shares crept higher in Monday’s premarket trading, with Goldman Sachs, JP Morgan Chase, and Wells Fargo also gaining ground. So while there is a mix of good and bad news, reasons for apprehension and reasons for hope, there certainly is never a dull moment on Wall Street.