Mergers & Acquisitions
This summer should be very active. One thing that is likely to pick up is mergers and acquisitions. We are also starting to see corporations putting their cash to work. Corporations are expected to put 650 billion dollars of their own cash into buying back their stock this year. That puts a floor under prices. In addition to that, companies are also looking to merge with those funds. By doing this companies are providing a large amount of demand. This in turn will also take supply off the market.
Simply put, there is a major drought in the southern plains of the United States. This includes mostly west Texas, Oklahoma, Kansas, Colorado and New Mexico. There is a lot of agricultural production in these locations. This highlights cattle, wheat and cotton. These areas have had only two inches of rain since October of 2017. Later in the summer and fall we might see some price increases in association with these products.
In the past 23 of the last 30 quarters, the average consumers’ checking accounts have been going up. It’s important to keep in mind that 70% of GDP is consumer spending. As we are heading into summer we would like to see the consumer pick up on spending. The hesitation is most likely because a majority of Americans could be leery of the current economy.
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Economic forecasts set forth in this presentation may not develop as predicted.
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