Daily Agenda: Fed Confirms June Hike on the Table

Markets sell off on release of FOMC notes; Bayer makes Monsanto bid official; more corruption allegations for Malaysian fund; Wal-Mart beats estmates.


Notes from the last FOMC meeting released yesterday confirmed that Federal Reserve policymakers are prepared to boost benchmark rates in June provided that underlying fundamentals remain strong for the U.S. economy. Global markets reacted this morning with a selloff across the asset-class spectrum, with declines in commodities, bonds and with equity indices reaching a multiweek low. With a stronger dollar on anticipation of higher interest rates in the near-term, some bank strategists have predicted that emerging markets debt and equities appear vulnerable. For now, it appears that anticipation of U.S. monetary policy continues to set the tone for all asset classes and geographies.

Bayer bid for Monsanto revealed. On Thursday, Monsanto confirmed that it has received an unsolicited acquisition offer from German chemical and pharmaceutical giant Bayer following a week of media speculation. The offer came only weeks after Werner Baumann ascended to the role of Bayer CEO and after Monsanto’s failed attempt to purchase Syngenta. The proposed merger at more than $70 billion in debt and equity would be the largest in German market history.

More corruption allegations at Malaysian sovereign fund. The Wall Street Journal reported today that the son of Malaysian Prime Minister Najib Razak diverted funds from state investment vehicle 1Malaysia Development for personal gain. According to the report, Riza Aziz purchased homes in London and New York and financed the film “The Wolf of Wall Street.” 1Malaysia Development has become the center of a political scandal in Malaysia after international investigations into money laundering and fraud at the fund arose last year.

Wal-Mart beats estimates. First quarter estimates for Wal-Mart Stores, the world’s largest retail chain, exceeded consensus analyst estimates at $0.98 per share for the period versus forecasts for $0.88. Critically, same-store sales in the U.S. rose by 1 percent, bucking a declining trend at higher-end competitors such as Target and Macy’s, suggesting that U.S. consumers are becoming increasingly thrifty, at least when they shop at physical stores.