Markets looked almost respectable this morning, with investing giants Warren Buffett and Kirk Kerkorian stepping back into the fray.
Buffett is teaming up with Mars to buy chewing gum legend Wrigley in a $23 billion deal for a company he's long admired. Chicago's Wrigley is a standard Buffett investment (though he rarely takes a partner) in a sector with long-term growth potential. His other food holdings include Kraft.
Kerkorian is taking his latest stab at resurrecting the American auto sector by amassing a 4.7 percent stake in Ford, with plans to buy more. His Tracinda investing group has picked up about 100 million shares, and news of the deal comes just days after Ford predicted 2008 would be a good year for the automaker despite widespread weakness in the industry. Last week, Ford managed a $100 million first-quarter profit, defying analysts who had predicted a loss.
Investors should cheer new deals given the shaky state of credit, rising inflation, the slowing economy, and jittery markets. A willingness to do big deals (Wrigley) or to dip yet another toe in problem sectors (Ford) is an encouraging sign that confidence may be returning among some of the more respected names on Wall Street.
More broadly, we're at the halfway point in first-quarter earnings season. So far the news is at least less bad than expected.
On average, with 53 percent of the S&P 500 reporting, earnings are off 14 percent from a year ago, according to National City's Nick Raich. That's pretty dismal, but like last quarter, almost all of the damage came from the financial and home-building sectors. Excluding those two trouble spots, we'd have a double-digit earnings gain of 15.7 percent for the quarter. Plus, Wall Street forecasters continue to predict a sharp earnings recovery in third-quarter results.
We're not out of the woods, but some good news on a Monday morning is always welcome.