Monday, March 21, 2011

Markets jump on M&A activity

Stocks shot out of the gate at the opening & haven't turned back.  Dow is up 196 taking it over 12K, advancers ahead of decliners 5-1 & NAZ gained 53.  Bank stocks had only moderate gains as they underperformed the stock market averages. 


Value 220.11 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change   1.15  (0.5%)

The Alerian MLP Index rose 4+ to over 370 on market enthusiasm while the REIT index was up 2½ to the 232s.  Junk bond funds were about 1% higher but Treasuries slipped back related to strong stock markets.  The yield on the 10 year Treasury bond rose 7 basis points to 3.34%.  Oil climbed as air strikes in Libya threatened to prolong a supply outage in Africa's 3rd-biggest producer & renewed concern that escalating turmoil may disrupt Mideast exports.  Gold climbed for a 4th straight session after air strikes in Libya boosted demand for a haven.

JPMorgan Chase Capital XVI (AMJ)

stock chart

Treasury yields:

U.S. 3-month
U.S. 2-year
U.S. 10-year

CLJ11.NYM....Crude Oil Apr 11...102.02 .....Up 0.95  (0.9%)

GCH11.CMX...Gold Mar 11.......1,433.50 ...Up 17.60  (1.2%)

AT&T to Acquire T-Mobile

Photo:   Bloomberg

AT&T (T), a Dow stock, wants to buy T-Mobile Deutsche Telekom in a cash & stock deal valued at $39B to make it the largest cellphone company in the US.  This would reduce the number of wireless carriers with national coverage from 4 to 3 & faces close regulatory scrutiny.  T is the country's 2nd-largest wireless carrier & T-Mobile USA is the 4th largest. The acquisition would give T 129M subscribers, vaulting past Verizon Wireless' 102M & would serve about 43% of US cellphones.  T stock is up 54¢ but has done little in the last year.

AT&T Surges on $39 Billion T-Mobile Bid for U.S. Wireless Lead

AT&T Inc. (T)

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Citigroup to Reinstate Dividend at 1 Cent

Photo:  Bloomberg

Citigroup (C) plans to reinstate a quarterly div of a penny per share in Q2 after launching a 1-for-10 reverse stock split.  "Citi is a fundamentally different company than it was 3 years ago," CEO Vikram Pandit said. "The reverse stock split and intention to reinstate a dividend are important steps as we anticipate returning capital to shareholders starting next year."  After being rescued bu the gov, Citi cannot pay divs of more than a penny until 2012 unless it obtains consent from the 3 federal agencies.  Citi received $45B in gov support which  has been paid back.  Citi has focused much of its energy in the past 2 years on cutting off parts of its businesses that don't fit with its main banking operation.  The reverse stock split is expected on May 6.

Citigroup to Reinstate Dividend at 1 Cent, Plans Reverse Split

Citigroup Inc. (C)

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Merger Monday is doing wonders for stocks.  The intl news is not good especially with threats of reduced oil from Africa & the $100+ oil has not fully worked its way into the prices at the pumps in the US.  Housing sales fell 9.6% (to below a 5M annual rate) in Feb as home prices fell to their lowest level in nearly 9 years.  The Japanese disaster looks to be getting worse & it will bite global businesses harder.  Fallout (not meant to be a bad pun) is being felt around the world.  Toyota shut plants because it lacks key parts for its cars.  GM is juggling production schedules, putting scarce parts only in better selling cars.  Buyers took Dow back over 12K (where it was 7 weeks ago) & gold is just $10 below its record highs.  For those looking for diamonds in the rough, Citi is down 4¢ today but has emerged from being at death;'s door & should work out for those with long term visions.  Below is a link to a recent article I wrote about Citi.

Dow Industrials (INDU)

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