A flurry of M&A deals lifts global stocks. Yes, even tech stocks

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Good morning, Bull Sheeters. Upbeat vaccine news and a flurry of major tech deals have shaken equities out of a two-week rut.

Let’s see where investors are putting their money.

Markets update


  • The major Asia indexes are in the green in afternoon trading, with Japan’s Nikkei up 0.6%.
  • Microsoft is out, and Oracle is in. That’s the major development, first reported by the Wall Street Journal, this morning in the TikTok U.S. sweepstakes.
  • SoftBank shares were up nearly 9% in Tokyo today on a string of huge headlines. It sold its semiconductor unit, Arm Ltd., to Nvidia for $40 billion in a record-breaking deal. It’s also getting serious about taking the firm private.


  • The European bourses were also higher at the open with Paris’s CAC leading the way, up 1%, before declining in late-morning trade.
  • AstraZeneca shares opened with a pop, before falling. That’s after the British drugmaker announced over the weekend it got the green-light to resume its COVID-19 vaccine trials in the U.K. The news also gave a boost to global equities in early trading on Monday.
  • The ECB has a currency problem. The euro is up again this morning, and its steady rise is undoing some of the intended effects of the stimulus measures unveiled by the central bank this spring.


  • U.S. futures—yes, tech futures too—point to a strong open. That’s after the Nasdaq fell 4% last week, its worst decline since March.
  • Nothing to see here, keep on trading. That’s more or less the consensus of Goldman Sachs and Deutsche Bank analysts who wrote in separate notes that the worst of the stocks skid is behind us.
  • The odds are ever slimmer that the Senate will pass a new fiscal stimulus bill, and so all eyes are on the Federal Reserve, which meets tomorrow and Wednesday, the last such meeting before Election Day.


  • Gold is flat, trading above $1,950/ounce.
  • The dollar is down.
  • Crude is down too with Brent trading below $40/barrel.


The S&P 10

The S&P 500 has had a rough September—two straight down weeks, including a dud last week, its worst since June.

So it’s little wonder the pros continue to look backwards to get some a glimpse of what lies ahead. And you don’t have to go too far back to see some warning signs. Take August. To recap: the S&P 500 surged an improbable 7.2%, the best August performance since 1986.

That August rally set a far more dubious record along the way. According to BofA Securities, more than 50% of the S&P 500’s August return came from a mere ten stocks. (No points awarded for guessing which ten).

To illustrate the lopsided concentration, BofA put all 500 stocks in the benchmark index into a single mash-up pie chart, ranking each holding by its August return. The result is this thing of beauty:

Seriously, I would love to see an artist’s rendering of this. In a single image, it says so much about the 2020 bull market rally.

Nvidia, which cracks the top ten here, is up 6% in pre-market trading this morning, riding high on its deal to buy chipmaker Arm Ltd. That news is lifting tech stocks in general. (Oracle, which you cannot even make out in this chart, is up even higher in the pre-market).

And what of the other ~490 stocks? You can barely make out a bit of health care (Johnson & Johnson) and commerce (Mastercard), but the other big sectors are nowhere to be seen. No finance, no energy, no industrials or consumer discretionary stocks.

We’ve known for some time that Big Tech is carrying the water in this bull run. We’ve also learned that Big Tech has the power to take markets down with it once investors start rethinking valuations. The Nasdaq 100 has fallen 11%—yep, that qualifies as a markets correction—since its all-time highs, leading to a rough September.

The interesting news this morning is that Goldman and Deutsche Bank both describe the pullback as “typical,” and that stocks look attractive once again.

The question remains: are all stocks looking attractive, or just a handful?



It’s a big day around here. Italian kids went back to school this morning, the first time since early March. (You may recall Italy was the first European country to shut schools and businesses to combat the virus outbreak.)

Despite a resurgence in COVID cases (but nothing like neighboring countries France and Spain), the return to classroom-instruction was never really in doubt here.

From my view at least, there hasn’t been much of a public debate about it, which reflects the way Italy has handled the pandemic from the start. Public health officials continue to advise the politicians, who then lay out the plan for the rest of us to follow. And we’re mostly following that plan.

To wit, the kids this morning masked up and entered the school building, one at a time. We parents hung back on the sidewalk and happily waved them off before grabbing an obligatory coffee at the nearby café.

For the first time in memory, Italian school kids will be seated one child per desk (it used to be a student had a compagno di banco, or deskmate, at a single oversized desk) and the day’s activities will be conducted according to social-distancing regulations, which we’re all familiar with.

The biggest disruption for the kids is the new school. For us, it’s a snap. It’s a short walk to a historic building in the center of neighborhood.

Our ‘hood, Garbatella, took off in the 1920s when Mussolini commissioned several dozen architects to design a series of residential quarters for working families on a hill just beyond the ancient walls of the city. On the cornerstone of every dwelling, you see the construction date, chiseled in the E.F.—epoca fascista—calendar. E.F. VII would be 1929, for example.

In the middle of Garbatella, a massive school was built, replete with imposing hawk statues overlooking the entrance. (You can see the school—at the 40-second mark, in this pre-war propaganda reel.) Our kids went there when they were young. They’ve now graduated to a different school that predates the Mussolini years.

All these images and memories came flooding back this morning on the walk through the neighborhood, up the hill to school.

Let’s hope it lasts. Speriamo bene, as the Italians say.

Have a nice day, everyone. I’ll see you here tomorrow. 

Bernhard Warner

As always, you can write to bullsheet@fortune.com or reply to this email with suggestions and feedback.

Today's reads

The YOLO trade. In case you were wondering, that's shorthand for "you only live once." And it's become a kind of mantra for the army of retail traders who've fallen in love with options trading, a phenomenon the pros last saw in the late 1990s just before the dot-com bubble collapsed. Options traders are inflating a bubble in tech stocks, seldom a sound investment strategy, Fortune's Jeff John Roberts reports. But then, you only live once. 

TikTok tick tock. It's hardly a done deal, but the potential Oracle-TikTok tie-up could still have ramifications beyond Silicon Valley. President Trump's hard line on the viral video platform wasn't a particularly popular one among voters, a recent Fortune-SurveyMonkey poll found.

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Market candy

Quote of the day

Fifty years ago, Milton Friedman in the New York Times magazine proclaimed that the social responsibility of business is to increase its profits... Half a century later, it is clear that this narrow, stockholder-centered view of corporations has cost society severely.

That's Colin Mayer, Leo E. Strine Jr., and Jaap Winter writing in a Fortune opinion piece on yesterday's anniversary of Friedman's seminal essay entitled, “The Social Responsibility of Business Is to Increase Its Profits.” A half-century later, Friedman's manifesto is still being hotly debated. The problem is Friedman's extremely limited take on corporate responsibility looks way out of touch with the times, economists and business leaders on the Right and Left now argue.

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