Merger Wednesday

There is news of two large cash deals this morning of around $5 billion each. Applied Materials is buying Vareant and Conagra has made a bid for Ralcorp. This is precisely what the bulls need.

Institutional investors as a group are just about fully invested and the fuel to drive this market higher needs to come from somewhere. Continued cash M&A would be a boon to the market. It has been a very active week for cash deals thus far. I believe this will help limit the decline. As such, I am removing my hedges. While I am still worried about stocks over the next few months my long portfolio is not very large.

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