Markets were under water all day. Dow lost 82 (closing near the lows), decliners over advancers 2-1 & NAZ fell 11. The Financial Index dropped 1+ to the 206s, the bulls would say nothing serious. The MLP index was up fractionally in the 389s & but the REIT index fell 1+ to the 252s (remaining near its yearly highs in the 255s). Junk bond funds drifted lowed while Treasuries had a modest advance, bringing the yield on the 10 year Treasury below 2%. Crude fell for the first time in 3 days on an Energy Dept report showing a larger- than-expected supply gain. Gold ended lower, as physical demand was seen as lacking, the lowest settlement in 2 weeks.
JPMorgan Chase Capital XVI (AMJ)
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Photo: Bloomberg
The administration is issuing the first national standards to control air pollution from gas wells that are drilled using a method called hydraulic fracturing, or fracking, but not without making concessions to the oil & gas industry. Obama has strongly backed natural gas drilling as a clean energy source, & recently announced an executive order calling for coordination of federal regulation to ease burdens on producers. But he has come under criticism for policies that may discourage energy development. Much of the air pollution from fracked gas wells is vented when the well transitions from drilling to actual production, a 3-10-day process which is referred to as "completion." An earlier version of the rule limiting air pollution from gas wells would have required companies to install pollution-reducing equipment immediately after the rule was finalized. Now drillers would be given an additional 2 years to employ technology to reduce emissions of smog- and soot-forming pollutants during that stage. The EPA will require drillers to burn off gas in the meantime, an alternative that can release smog-forming nitrogen oxides, but will still reduce overall emissions. Industry groups had pushed for the delay, saying the equipment to reduce pollution at the wellhead during completion was not readily available. About 20K wells a year are being fracked, a process where water, chemicals & sand are injected at high pressure underground to release trapped natural gas. "We believe that industry was correct in that we needed to have a ramp-up period," an administration official said. This is "new" technology used for getting more oil & gas, especially in the US. Many MLPs are investing large sums in this technology.
Obama Issues First Pollution Rules for Gas Wells, Offers Delay
Photo: Bloomberg
JPMorgan Chase Capital XVI (AMJ)
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Treasury yields:
U.S. 3-month | 0.066% | |
U.S. 2-year | 0.270% | |
U.S. 10-year | 1.984% |
| CLK12.NYM | Crude Oil May 12 | 102.66 |  1.54 (1.5%) |
The administration is issuing the first national standards to control air pollution from gas wells that are drilled using a method called hydraulic fracturing, or fracking, but not without making concessions to the oil & gas industry. Obama has strongly backed natural gas drilling as a clean energy source, & recently announced an executive order calling for coordination of federal regulation to ease burdens on producers. But he has come under criticism for policies that may discourage energy development. Much of the air pollution from fracked gas wells is vented when the well transitions from drilling to actual production, a 3-10-day process which is referred to as "completion." An earlier version of the rule limiting air pollution from gas wells would have required companies to install pollution-reducing equipment immediately after the rule was finalized. Now drillers would be given an additional 2 years to employ technology to reduce emissions of smog- and soot-forming pollutants during that stage. The EPA will require drillers to burn off gas in the meantime, an alternative that can release smog-forming nitrogen oxides, but will still reduce overall emissions. Industry groups had pushed for the delay, saying the equipment to reduce pollution at the wellhead during completion was not readily available. About 20K wells a year are being fracked, a process where water, chemicals & sand are injected at high pressure underground to release trapped natural gas. "We believe that industry was correct in that we needed to have a ramp-up period," an administration official said. This is "new" technology used for getting more oil & gas, especially in the US. Many MLPs are investing large sums in this technology.
Obama Issues First Pollution Rules for Gas Wells, Offers Delay
Pfizer, a Dow stock, may select a buyer for its infant-nutrition unit as soon as next week after receiving bids from Nestle & Danone. Each has submitted final offers of about $10B. Other consumer companies & private-equity firms are also involved in the auction because they may alleviate the antitrust risk for the bidders. Danone & Nestle have been working on ways to overcome antitrust hurdles since Feb when Nestle was considering buying all of the infant-nutrition assets & then conducting an auction to sell what it can’t keep because of regulatory concerns it would become too dominant in some markets. Either way, PFE will be receiving money it can use to purchase other companies. PFE was up 14¢.
Pfizer Said to Choose Buyer for Infant-Nutrition Unit as Soon as Next Week
Pfizer, Inc. (PFE)
Yahoo reported Q1 sales that topped estimates, fueling optimism that a turnaround may take hold. Revenue, excluding sales passed on to partner sites, rose 1% to $1.08B, slightly ahead of the $1.06B predicted & the first increase since Q3 of 2008. YHOO benefited from growth in the US online-ad market, which grew 23% as corps devoted more marketing dollars to the internet. Since CEO Thompson took over in Jan, job cuts were announced & there has been a reorganization to lift profit, reverse a sales slump & lure back users lost to the competition. Sales & profit this qtr may also exceed estimates with revenue of $1.03B-$1.14B, YHOO said & compares with a $1.08B forecast. Income from operations in Q2 will be $115M-$195M, YHOO said & compares with the average forecast of $164M forecast. Search-advertising revenue, excluding sales passed on to partners, increased 8% to $384M, compared with a 4% decline for display, the category that includes banners, boxes & videos adorning Web pages. The sign in the picture summarizes the chart for Yahoo in recent years. But today, it was up 48¢.
Yahoo Shares Advance as First-Quarter Sales Fuel Optimism for Turnaround
Yahoo! Inc. (YHOO)
After gaining almost 300 in 2 days, Dow & the rest of the market were entitled to take a rest. Earnings have been powering the market moves in both directions. So far, earnings are getting mixed reactions but Dow is down almost 200 in Apr. MLPs were clearly market leaders off the lows in early 2009, but this year have been lagging behind. YTD, the index is about even while Dow is up a solid 800. New rules for fracking may remove some uncertainties about their businesses. Back to Dow, it broke thru 13K convincingly more than a month ago but since then has gone nowhere. The first wave of earnings reports have not been a help & earnings season may continue to be challenging for stocks.
Dow Industrials
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