Friday, June 15, 2012

Markets rise on hopes for another Euro bailout

Dow shot up 115, advancers over decliners a muted 2-1 & NAZ added 36.  The Financial Index was up 2+ to the 193s, last seen a month ago.

The MLP index was down 1 to the 362s, near 7 month lows, & the REIT index rose 1+ to 253.  Junk bond funds were mixed to higher & Treasury prices rose after the Federal Reserve reported that output at the nation's factories is slowing.  Oil was higher on speculation that central banks will take steps to bolster global economic growth as investors await Greek elections this weekend.  Gold continued to mark time.

AMJ (Alerian MLP tracking fund)

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CLN12.NYM...Crude Oil Jul 12...84.08 ...Up 0.17 (0.2%)

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Microsoft Said to Plan Branded Tablet Computer Debut Next Week

Photo:   Bloomberg

Microsoft, a Dow stock, will announce plans to sell a tablet running the next version of the Windows under its own brand, a major departure from its strategy of partnering with computer makers.  It could demonstrate the device at an event scheduled on Jun 18.  MSFT has said it aims to release the new Windows 8 in time for the holiday season.  MSFT has been working with personal-computer makers to produce Windows 8 tablets, designed to win back consumers who have shunned Windows machines in favor of the iPad by Apple (AAPL).  But it may be taking steps to exert more control over the hardware that runs its programs, as AAPL does, in order to mount a more successful challenge.  Since the release of IBM's (IBM), another Dow stock, first PC in 1981, MSFT has focused on software & left design & branding to hardware makers.  The shift in strategy has the potential to sour its relationship with some PC partners, many of which have been investing to develop Windows 8 tablets themselves & may not want to compete directly with MSFT.  The change may also radically alter profitability in the Windows business, which now sells just software with operating margins of more than 60%.  By comparison, computer maker Dell’s (DELL) operating margin are about 7%.  The stock was up 68¢.

Microsoft (MSFT)

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Hollande, Merkel pledge to seek growth for Europe

Photo:   Yahoo

Germany's Chancellor Merkel criticised France's economic performance in a war of words with its new Socialist president, Francois Hollande, over how to tackle Europe's deepening debt crisis ahead of a pivotal election in Greece.  Describing her own country as Europe's "stabilising anchor and growth engine", the center-right chancellor told German business leaders that Europe should talk about the growing gap between the bloc's 2 biggest economies.  The unusual rhetoric came after Hollande met German center-left opposition leaders this week & also unveiled economic reforms, including a partial lowering of the pension age, that Berlin fears will only deepen France's economic problems.  The rift between the 2 powers that traditionally drive EU policy could hardly come at a worse time.  If a radical left party wins in Greece, the euro zone could find itself scrambling to avert a humiliating break-up.  Merkel said in her speech that only a decade ago Germany trailed or was at best even with France by traditional measures of competitiveness, such as unit labor costs.  Now, she said, Germany had opened up a "growing" lead, saying this was an issue "that must be discussed in Europe, naturally".  Tensions have risen so much that French Prime Minister Jean-Marc Ayrault felt moved to deny that his country was trying to form a united front with Italy & Spain against Merkel & her drive for austerity in the single currency zone.  But France later sought to cool tempers, saying relations with Germany were intact after Hollande & Merkel found common ground on G-20 issues during a video-conference with other EU leaders.  "There is a free exchange of views, which is not the same as aggressiveness. We don't perceive it that way at all," said a French presidential source.  Sure!  Who believes that?  But in all  fairness, the € has climbed back from $1.24 to $1.26½ this month.

With Europe on Edge, France and Germany Squabble  Reuters

Facebook Told Regulators First IPO Range Was Near Fair Value

Photo:   Bloomberg

Facebook, which has lost $22B in market value since its IPO, told regulators before its debut that the proposed price range reflected the fair value estimated earlier this year. The proposed IPO price range was $28-$35 a share on Apr 25, based on a projected fair value of $30.89.  FB raised $16B on May 17, the largest ever for a technology or internet company.  Since then, shares have tumbled on concerns that ad revenue growth won’t keep pace with surging membership as more users access the site on mobile phones.  Filings today show the SEC also questioned FB about its ability to generate revenue from mobile ads.  FB sold stock at $38, the top end of its revised range, making it more expensive than almost every company in the S&P 500 Index.  Since then the shares have slumped 26%, battered by concern over FB growth prospects. FB rose 1.43 to 29.72.

Facebook Told Regulators First IPO Range Was Near Fair Value

Facebook (FB)

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There was not a lot going on, but there were enough buyers to take Dow higher.  Dow is back to where it was a month ago & has risen 700 off its recent lows.  But there was a little selling at the close.  Next week could be very important for the stock market.  After the election in Greece, the G-20 meets & the FOMC has a meeting where the bulls are hoping it will pull a rabbit out of the hat.

Dow Jones Industrials

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