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Morning Commentary: Yellen comments lift market; Herbalife trades off on news Icahn looking to sell
By Stephanie N. Rotondo
Seattle, Aug. 26 – The markets were trending higher early Friday as Janet Yellen indicated that the time was ripe for another interest rate increase.
The Federal Reserve chairman was speaking during a three-day meeting from Jackson Hole, Wyo. In a prepared statement, Yellen said that employment and “price stability” were nearing the levels the Fed wanted to see, thus making a case for another rate increase this year.
“In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the Federal Funds rate has strengthened in recent months,” Yellen said.
However, she did not indicate when such an increase might occur. The Fed has policy meetings scheduled in September, November and December.
As for convertible debt dealings, volume remained thin.
Herbalife Ltd. was bucking the day’s upward trend, as it was reported that Carl Icahn – one of the nutritional supplement company’s biggest defenders – has been looking to sell his 18% stake in the company.
The 2% convertible notes due 2019 came in about a point to straddle 98, according to a market source. The equity underlying the bonds (NYSE: HLF) was off 4.73% in early trading, at $59.00 a share.
According to news reports, Icahn even considered selling his stake in Herbalife to Bill Ackman. The two billionaire investors have been fighting over Herbalife since 2012, with Ackman deeming the company a pyramid scheme and Icahn coming to its defense.
Icahn is reportedly working with Jefferies Group LLC on the sale of the equity stake.
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