US COMMUNICATIONS: Paramount Skydance: Prepares Bid For WBD - WSJ
First Take: We had been favorable on the combination of Paramount and Skydance due to more benign financial policies including identified synergies and required board approval for >4x leverage, despite integration risks. This potential cash deal could significantly raise leverage above the 4x threshold, but we would expect investors to look through this due to merit in the deal, primarily the scale and synergies of the combined DTC platforms. PSKY’s bid ahead of WBD’s planned split (slated for April 2026) is likely to preclude other bidders for WBD’s studios, but we would not be surprised to see other bids emerge. We expect spreads of both PARA and WBD to see meaningful compression, awaiting a formal announcement and more details on funding. We see only modest regulatory scrutiny on this deal if confirmed and believe consolidation in the industry will persist.
• WSJ reported that Paramount Skydance is preparing a majority cash bid for Warner Bros. Discovery.
• The bid will be for the entire company, including streaming and studio (S&S) and global linear networks (GLN).
• The deal is backed by the Ellison family.
• CNBC reported a deal could be as soon as next week.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
EURJPY TECHS: Trend Structure Remains Bullish
- RES 4: 177.08 2.000 proj of the Feb 28 - Mar 18 - Apr 7 price swing
- RES 3: 175.43 High Jul 11 ‘24 and a key medium-term resistance
- RES 2: 174.86 1.764 proj of the Feb 28 - Mar 18 - Apr 7 price swing
- RES 1: 173.97 High Jul 28 and the bull trigger
- PRICE: 172.76 @ 16:03 BST Aug 12
- SUP 1: 169.73/45 Low Jul 31 / 23.6% of the Feb 28 - Jul 28 bull leg
- SUP 2: 169.71 50-day EMA
- SUP 3: 168.46 Low Jul 1
- SUP 4: 167.46 Low Jun 23
A bullish trend condition in EURJPY remains intact and for now the recent move down is considered corrective. Key support to watch lies at the 50-day EMA at 169.62. A clear break of the EMA is required to highlight a stronger short-term bearish threat. Moving average studies remain in a bull-mode position highlighting an uptrend. A break of the Jul 28 high of 173.97, would resume the bull cycle.
US FISCAL: Federal Deficit Up 7% Y/Y With 2 Months To Go In Fiscal Year
Treasury reported a $291.1B federal budget deficit in July, larger than the $239B shortfall expected by Bloomberg consensus but almost exactly in line with the Congressional Budget Office's previously published $289B estimate.
- As MNI noted previously, while the year-to-date deficit is up 7% Y/Y to $1.629T with two months remaining in the 2025 fiscal year (which runs Oct-Sep), compared with $1.517T in the same period of FY2024, the difference is smaller when adjusting for timing changes.
- CBO estimated a $37B wider deficit when accounting for these changes, vs $109B "actual". The implied adjusted rise in the deficit is around 2% Y/Y, tracking lower than nominal GDP growth over that period.
- YTD revenue is up 6.4% Y/Y ($4.346T), with expenditure up 6.7% ($5.975T).
- At the start of 2025, CBO estimated a $1.9T deficit this fiscal year which remains plausible with August typically seeing a large deficit ahead of a better outturn in September in part on tax receipts, though looks on the high side at this point.
- That implies the FY2025 deficit looks closer to coming in below the 6.4% of GDP posted in FY2024, though is widely expected to re-expand in FY2026 largely on "One Big Beautiful Bill" effects.
- CBO will publish the Monthly Budget Review with its final projection next month.
COMMODITIES: WTI Falls, Gold Steady, Copper Bounces
- WTI has lost ground during US hours to be on track for its lowest close since early June. The EIA’s short-term energy outlook showed an upward revision in the expected supply surplus for 2025.
- The EIA now sees a supply surplus of 1.7m b/d this year, compared to a previous forecast for a 1.1m b/d surplus.
- WTI Sep 25 is down by 1.2% at $63.2/bbl.
- WTI futures remain below the 50-day EMA at $65.15, which keeps short-term momentum pointed lower. The clear break exposes $58.17, the May 30 low.
- Meanwhile, spot gold has edged up by 0.2% to $3,349/oz, with the yellow metal trading in a narrow range as US CPI data came in broadly in line with expectations.
- For now, a bull cycle in gold that started Jun 30 remains intact. Key near-term resistance is $3,439.0, the Jul 23 high.
- However, the yellow metal has previously traded through support at $3,334.0, the 50-day EMA. A clear break of this level would signal scope for a deeper retracement and expose the next key support at $3,248.7, the Jun 30 low.
- Elsewhere, copper has bounced by 1.9% to $452/lb, bringing the red metal to its highest level since July 31.
- However, copper remains well below the Jul 30 high, which cancels the recent bullish theme and instead highlights a bearish threat.
- A continuation lower would signal scope for a test of key support at $411.75, the Apr 7 low. Initial resistance to watch is at $497.25, the Jul 8 low.
