The numbers: Thirty-seven deals worth $5 billion or more, totaling $496 billion, were announced between July and September, according to data from Refinitiv. By both deal count and deal value, that’s the best third quarter since records began in the 1970s. Including smaller deals, the total value was above $1 trillion.
September was by far the busiest month of the period, logging a 107% increase over the same month in 2019.
In the spring, dealmaking slowed as nervous boards took steps to conserve cash and shore up their balance sheets. As initial lockdowns ended over the summer, however, companies grew more assured about where they stood, Guillermo Baygual, co-head of M&A for Europe, the Middle East and Africa at JPMorgan Chase, told me.
“Management boards are seeing a level of activity which can give them confidence as to where they are going to land,” Baygual said.
That’s allowed them to start making strategic plays to position themselves for the next economic cycle.
“Companies feel there is going to be limited growth in the coming period, and a number of their weaknesses have been exposed,” Baygual said. This is encouraging a wave of consolidation in industries like banking, telecommunications and energy.
Private equity companies have also been feeling more comfortable putting money to work, Baygual said, leading to a spree of take-private deals and other debt-fueled acquisitions powered by rock-bottom interest rates. Corporations have been more inclined to pursue stock deals.
Unlike the IPO market, which is expected to slow this month in the United States ahead of the November election, Baygual expects mergers and acquisitions to continue apace through the end of the year.
Should Biden take the White House, talk of tax reform could weigh on activity. But “in general, a single event is not going to drive the M&A agenda,” Baygual said.
Stocks rise despite mixed messages on Trump’s condition
President Donald Trump is trying to convince the world that his Covid-19 diagnosis isn’t a big deal after all. That strategy might be working on investors, at least for now.
What’s happening: Global markets and US stock futures are rising after Trump’s physicians said that the president could be discharged from Walter Reed National Medical Center as early as Monday.
Early morning Trump tweet: “STOCK MARKET HIGHS. VOTE!”
After the S&P 500 closed nearly 1% lower on Friday, futures are up 0.6% to kick off the week. The Nasdaq Composite, which fell 2.2% Friday, is also heading for a solid open, my CNN Business colleague Jill Disis reports.
The VIX, a measure of US stock market volatility, rose another 5%, however, as investors braced for possible surprises.
Reports over the weekend sowed confusion about Trump’s condition. While his physicians on Saturday said the president was “doing very well,” Chief of Staff Mark Meadows later told reporters that Trump’s vitals were “very concerning.”
Watch this space: Investors don’t have a consensus about whether Trump’s illness will affect the outcome of the November election. But a new Wall Street Journal/NBC News poll finding that former Vice President Joe Biden notched a 14-point lead over Trump following last week’s debate, the biggest Biden lead to date, is generating lots of buzz.
Stimulus optimism is also helping push riskier assets higher despite a lack of clarity on the president’s condition. Trump tweeted his support for more stimulus over the weekend.
But it’s not clear that Congress has the capacity to enact big legislation right now. Amy Coney Barrett’s nomination to the Supreme Court remains a priority for Republicans. A number of senators have also tested positive for Covid-19 in recent days, complicating the outlook.
House Speaker Nancy Pelosi met with Treasury Secretary Steven Mnuchin last week in an attempt to strike an agreement on additional aid. That effort has not yet produced a breakthrough, though Pelosi and Mnuchin continue to negotiate.
Regal and Cineworld theaters shut down across US and UK
Facing a void of new blockbusters, theater chains are under enormous strain — and some may not survive the pandemic.
The news comes just days after the latest James Bond film, “No Time to Die,” was delayed until spring 2021 as a second wave of coronavirus infections hits Britain and many US states.
In a statement released on Monday, the company said it could not provide customers “with the breadth of strong commercial films necessary for them to consider coming back to theaters against the backdrop of Covid-19.”
Investor insight: Cineworld’s decision to close its theaters again has renewed fears about its ability to make it through the crisis. It did not put a date on when theaters would reopen. Shares plummeted more than 42% in London on Monday.
The latest ISM Non-Manufacturing Index, a gauge of the US services sector, posts at 10 a.m. ET.
Coming tomorrow: Federal Reserve Chair Jerome Powell will discuss the economic outlook at the National Association for Business Economics’ annual meeting.