Tuesday, May 10, 2011

Stock markets rise led by stronger commodity markets

Dow gained 58, advancers over decliners 3-1 & NAZ was up 16. Bank stocks are leading the rising markets but the Financial Index is still struggling to find its footing for a longer term advance.

S&P 500 FINANCIALS INDEX

Value	218.02
Change	1.72 (0.8%)

The MLP index recovered another 2 to the 374s & the REIT index rose 2+ to the 246s. Junk bond funds were strong, many rising 1+% but Treasuries were weak ahead of $72B being auctioned off this week. Oil dropped after CME raised margins & on speculation US stockpiles increased to near the highest level in 2 years. Gold & silver rose for a 3rd day as concern about Europe debt woes spurred demand for precious metals as a protection of wealth.

JPMorgan Chase Capital XVI (AMJ)

Treasury yields:

U.S. 3-month		0.03%
U.S. 2-year		0.55%
U.S. 10-year		3.16%

CLM11.NYM

...Crude Oil Jun 11

...102.29

...

0.26

(0.3%)

GCK11.CMX

....Gold May 11

......1,508.40

...

5.50

(0.4%)

SIK11.CMX

......Silver May 11

.........38.12

1.01

(2.7%)

Microsoft Agrees to Buy Skype for $8.5 Billion

Photo: Bloomberg

Microsoft, a Dow stock, has agreed to buy the internet telephone service Skype for $8½B, the biggest deal in its 36-year history. Buying Skype gives MSFT access to a user base of 170M who log in to Skype every month, using the internet & Skype usernames as a complement to the traditional phone network with phone numbers. MSFT will marry Skype's functions to its Xbox game console, Outlook email & Windows smartphones. All of these platforms already have other options for internet calling, but the addition of Skype users would expand their reach, making them more useful. Skype users made 207B minutes of voice & video calls last year & most of that was free computer-to-computer calls Skype lost $7M on revenue of $860M last year. MSFT fell 25¢.

Microsoft Agrees to Buy Skype for $8.5 Billion to Add Web Calls

Microsoft Corporation (MSFT)

Google Will Announce New Music Service at Conference

Photo: Bloomberg

Google will launch a new online music service which will be similar to a service recently started by Amazon (AMZN) according to The Wall Street Journal. GOOG is likely to announce the service at its annual Google I/O developers conference in San Francisco, the service will operate in a testing mode initially & not be available to the public at large. In Apr, AMZN unveiled a service that allows customers to store about 1000 songs on its Web servers for free instead of their own hard drives & play them over an internet connection directly from Web browsers. Users could listen to songs they have uploaded to the service in a "streaming" mode, but will not be able to download the files. High priced GOOG was up 5.

Google Will Announce New Music Service at Developer Conference

Google Inc. (GOOG)

Enterprise Products Partners, the largest MLP, Q1 profit soared on production growth & higher demand for natural gas liquids from the US petrochemical industry & intl markets. Net income rose to $420M, or 49¢ per unit, in Q1 versus $70M, or 33¢ last year. Revenue rose 19% to $10.2B from $8.5B a year earlier. The company attributed the jump mostly to higher commodity prices & volumes. Analysts expected earnings of 45¢ on revenue of $9.2B. Its rig counts have increased in areas with reserves with natural gas liquids-rich natural gas & crude oil, many of which are near the company's integrated system. Petrochemical companies, especially ethylene producers, are continuing to choose cheaper domestic suppliers, leading to further growth. Ethylene is the most produced organic compound in the world. The units were up 31¢ on the news.

Enterprise Products Partners 1Q net income soars AP

Enterprise Products Partners L.P. (EPD)

Commodity & stock markets are having a good day. Traders view the plunge in commodities provides a good time to buy at low prices. Gold continues strong, with only modest selling in the last 2 weeks. Corp buyouts (like MSFT is making) are encouraging for stock buyers. But confusion over Greek debts & how to solve that problem, not to mention other European countries with similar financial problems, has not gone away. Markets are betting the financial powers in Europe will work their magic again like they did last year. I don't know.