Tuesday's Final Takeaways: SB Energy Delays IPO, PSKY & WBD Merger Clears Big Hurdle

Marley Kayden (0:01)

Welcome back to Market on Close. I'm Marley Kayden here in Chicago, alongside Sam Vadas at the New York Stock Exchange. Here's some final thoughts on the session today. One of my favorite sagas has seemingly perhaps wrapped up, or at least wrapped up one chapter. The Paramount Skydance, Warner Bros. Discovery merger cleared a major legal hurdle after Paramount reached a settlement with 12 states, agreeing to spend an additional $1.5 billion on US film production over five years to create a $47.5 million fund for workers displaced by the merger and also to release 30 films annually for the first two years post-merger and 32 annually for the following three years, including at least four independent films each year. The company also agreed to negotiate Paramount and Warner Basic cable channel deals separately for five years and established a board to monitor editorial independence at CBS and CNN.

The settlement does still require final judicial approval, but it removes a significant obstacle to the roughly $81 billion transaction. Important to note, though, the settlement itself does not require Paramount to remain headquartered in California. CEO David Ellison separately said the combined company would be based in Los Angeles, but Paramount has not yet made a formal settlement commitment to keep its headquarters in the state following reports it was looking to relocate prior to the announcement of the settlement. Also, diesel prices hitting another record high today now at $6.52, putting new pressure on US consumers and businesses. The Trump administration is now considering restrictions on diesel exports to Ukraine and other countries in a move aimed at keeping more fuel in the US and potentially easing prices here at home. Treasury Secretary Scott Besant said options of a full or partial export ban are being explored, with President Trump saying a decision would be made quote, fast one way or another. Diesel prices are up 77% year over year, while the national average for a gallon of regular gas stands at $4.47.

That's up more than 40% from a year ago. Sam, those are just two of the things that stuck out to me. But what stuck out to you on the session today?

Sam Vadas (2:08)

Well, Marley, another company tied to the data center build out has delayed its IPO now. So that's according to the New York Times that SB Energy has pushed back its offering, which had originally been planned for this month. The company is a subsidiary of SoftBank and has proposed to build the biggest data center project in the world in Ohio. The report though suggests there are questions about the valuation and bankers have struggled to fund enough buyers for the stock within the price ranges that are being sought by the company.

I spoke to Mike Townsend about the data center situation over at Charles Schwab this morning, which he says is really the big, sneaky, important issue in the midterm campaign. That's because you've seen this big public backlash surrounding the environment, energy and not in my backyard. You even have some politicians who have reversed their position now on data centers, which they had previously been all for in their communities. This is increasingly becoming a key election topic. Meantime, speaking of SoftBank, it is reportedly now looking for more money from the market. According to Bloomberg, it's seeking more than $11 billion in junk bonds. It would be the biggest deal of its kind. The company is reportedly looking to issue most of it in dollar securities and the rest in euro debt. Now, that money will be used to partly fund investments in OpenAI. But heading into tomorrow, Marley, what are you going to be looking out for?

Marley Kayden (3:28)

We have some earnings. General Mills and Cracker Barrel coming our way. So we'll get another look at the consumer in the morning. General Mills, the maker of Cheerios and a bunch of other household brands, will give us some representation of grocery consumption and how consumers are spending.

As far as Cracker Barrel, it's discretionary food spending, a sit-down family dining option. So we'll see if people are still making trips to the restaurant. How about you, Sam?

Sam Vadas (3:52)

Yeah, that's going to be really interesting. A couple of data points. We're going to be getting a number of global flash PMIs. So this is going to be the early September read. We'll get one here from the US on the manufacturing services side. This is from S&P, but also we'll get a little bit of an indication of what is happening over in Japan and Europe as well.

Remembering that, of course, all three of those major central banks have recently hiked rates in the last two weeks. And so it's going to be very interesting to see what the inflationary impulses are telling us through those surveys, Marley.