Solid Econ Data (and Even Walgreen Earnings) Not Enough to Save the Dow
1. Walgreen earnings rise, but CEO ponders Switzerland move
In a conference call with analysts, the CEO mentioned that Walgreen is thinking about buying more shares of the European pharmacy company that it already owns 45% of. The Swiss drug store is called Boots, and if Walgreen owns a majority of it, then it can easily boot the U.S. taxman out its pocket and move its official headquarters to Switzerland. That would grant the CEO an office with a fine view of Swiss yodelers and a lower tax rate.
Buying a company to move your HQ is called "tax inversion." New York City-based Pfizer was trying to do that when it sought to acquire British-based AstraZeneca -- and that got the Walgreen CEO to thinking. When Walgreen bought 45% of Alliance Boots AG in 2012 for over $6 billion (probably for the lucrative Ricola cough drops so popular among downhill skiers), it maintained the option to buy the rest by 2016.
Buying out 55% of a company is a MarketSnacks-worthy story already. But the possible USA-for-Switzerland tax swap proposal (especially during the patriotic craze of the World Cup) puts an extra Wall Street spotlight on the news. Walgreen's stock performance has been really strong (up 26% year to date), but investors were mixed Tuesday on the surprising move, so they sent the stock down 1.7%.
Plus, according to the research firm The Conference Board and its monthly survey, consumer confidence rose again in June as Americans increasingly observe "better business conditions" nationwide. In particular, investors were happy to see optimists outweighing pessimists according to the polling.
The takeaway is that winter weather was an ice cream headache for both the housing market and consumer spending. Now that spring has sprung, the econ data is showing both areas of the economy regaining their recovery-leading footing, even if Wall Street didn't celebrate the news with a stock market win on Tuesday.
As originally published on MarketSnacks.com
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