Markets were heading lower on Wednesday after applications for mortgages dropped last week. The Mortgage Bankers Association said that activity dropped 7.2% for the week ending on September 5. Activity accounts for both refinancing and home purchases. There was a rise last week in the 30-year fixed mortgage interest rate of 2 basis points, from 4.25% to 4.27%. The drop in refinancing applications was hefty with a 10.7% decline. The number of people applying for new home loans, which is the leading indicator of home sales, was down 2.6%.
Shares of Dollar General Corporation (DG) were up slightly after the company’s bid for Family Dollar Stores (FDO) turned hostile. Dollar General announced that they would be taking their offer directly to the shareholders after being turned down two times by Family Dollar. The most recent offer stated that the company would pay $80 per share for their smaller rival. Family Dollar turned down the most recent bid last week saying that it did not address antitrust issues. The current offer is set to expire on October 8, unless it gets extended. There is a current standing offer between Dollar General and the Dollar Tree for $8.5 billion that was set into motion over the summer. Dollar General has been trying to purchase Family Dollar for years and when the announcement was made of the agreement, Dollar General had stated they were not given a chance to place a bid. The current bid for Family Dollar sits above the Dollar Tree (DLTR) agreement at $9.1 billion. Dollar General’s Chief Executive, Rick Dreiling, said, “Our offer provides Family Dollar shareholders with significantly greater value than the existing agreement with Dollar Tree as well as immediate and certain liquidity for their shares. By taking this step, we are providing all Family Dollar shareholders a voice in this process, and we urge them to tender into our offer.”
Honda revealed a revolutionary self-driving car on Tuesday. The vehicle is able to drive safely on highways while the drivers’ hands are off of the steering wheel. The car is in the prototype phase now but the company said that it could become a reality in cars as early as 2020. The prototype model is the Acura RLX sedan. The vehicle is equipped with cameras that monitor lane markings and sensors on both the front and sides of the car. There is a beacon on top of the car that continuously sends lasers out to monitor the vehicles surroundings and a GPS that enables to car to stay on course and maintain speed limits. The prototype’s chief engineer, Hironobu Kiryu, said, “Honda is aiming to eliminate accidents, not just for the driver but for pedestrians and drivers of other cars.”
That’s all for today,
Warren Gates, Normandy Research