Monday, May 19, 2014

Higher markets led by oversold tech stocks

Dow went up 20, advancers over decliners 2-1 & NAZ advanced 35.  The MLP index dropped 2+ to 487 & the REIT index was off 1 to 299.  Junk bond funds were mixed & Treasuries did little in trading.  Oil climbed to a 4-week high on speculation that crude inventories at Cushing, Oklahoma, the delivery point for the contract, slipped for the 15th time in 16 weeks.  Gold pulled back in the PM.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLM14.NYM....Crude Oil Jun 14....102.63 Up ...0.61 (0.6%)

Live 24 hours gold chart [Kitco Inc.]

Photo:   Bloomberg

AT&T, a Dow stock & DIvidend Aristocrat,  plans to buy DirecTV for $48.5B,  to gain more than 38M video subscribers at home & in Latin America, & is stepping up an acquisition-fueled overhaul of the $110B US pay-TV industry.  AT&T will pay $95 per DTV share, $28.50 in cash & $66.50 in stock (10% more than DTV closing price on Fri).  Including debt, the deal values the largest US satellite-TV company at $67.B.  AT&T CEO Randall Stephenson is embarking on the company’s largest takeover in 8 years to bulk up after other announced industry merger.  The purchase gives AT&T a national satellite-TV provider to combine with its existing packages of wireless, phone & high-speed internet service.  The agreement was approved by both boards, & deal is expected to close within 12 months, pending regulatory review & shareholder approval.  With the transaction, AT&T to said its high-speed broadband network will cover 70M customer locations.  That was one of the reasons for the deal because it helps customers watch TV on any device, DTV CEO Mike White said.  AT&T stock fell 36¢ & DTV was off 1.53.  If you would like learn more about AT&T,
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If you would like learn more about DTV,
Click here for a FREE analysis of DTV and be sure to notice the intermediate time frame

AT&T Joins U.S. TV Revamp With $48.5 Billion DirecTV Deal

AT&T (T)


90% of economists in the Bloomberg Monthly Survey predict ECB pres will ease monetary policy in Jun after saying on May 8 that officials are “comfortable” with acting then.  While that allows investors to prepare for added stimulus & a weaker €, it also sets them up for a bigger disappointment should he fail to deliver.  Almost a year after Draghi pledged to support the euro-area recovery with low interest rates, the central bank is faced with mediocre economic growth & inflation at less than half its goal.  ECB Executive Board member Yves Mersch said today that the odds of Jun action, which could include unconventional measures, have risen “significantly.”  In the Bloomberg survey, a record 88% said Draghi’s guidance on interest rates, made every month since Jul, has been effective (up from 48% in Sep).  More than 60% said his comments after the May 8 meeting, when he said policy makers are “dissatisfied” with the inflation outlook & “comfortable with acting next time,” signaled intent.   Of the 47 economists who predicted action, 29 forecast a simultaneous cut in the benchmark rate, currently at 0.25%, & the deposit rate, which is at zero.  That would make the ECB the first major central bank to charge banks for parking excess cash with it overnight.  Denmark ended its experiment with negative rates last month.

Draghi Comfort Seen as Near Guarantee ECB to Ease Monetary Policy in June

Astra Zeneca (AZN) rejected another takeover offer from Pfizer, a Dow stock, as too low, leaving the companies in a stalemate over a deal to create the world’s biggest drugmaker.  Yesterday, PFE offered to pay £69.4B ($117B) to buy the drugmaker.  “The fate of the deal is now up to AstraZeneca’s shareholders,” a PFE spokesperson wrote in an e-mail.  “We believe our final proposal represents compelling and full value.”  AZN said that the bid doesn’t account for the promise of its pipeline of experimental medicines & presents risks for shareholders.  The bid, which PFE called its final offer, values the company at £55 a share.  AstraZeneca said it would need an offer higher than £58.85 to recommend it to shareholders.  “Following a conversation with AstraZeneca earlier today, we do not believe that the AstraZeneca board is currently prepared to recommend a deal at a reasonable price,” PFE CEO Ian Read said yesterday.  “We remain ready to engage in a meaningful dialogue but time for constructive engagement is running out.”  PFE stock rose 16¢ & AZN sank $9.64 to $70.64.  If you would like learn more about PFE,
Click here for a FREE analysis of PFE and be sure to notice the intermediate time frame
If you would like learn more about AZN,
Click here for a FREE analysis of AZN and be sure to notice the intermediate time frame

AstraZeneca Rejects Pfizer’s Sweetened $117 Billion Offer; Shares Plunge

Pfizer (PFE)

Astrazeneca (AZN)

Acquisition stories did little to excite the stock market today.  Some calm in eastern Europe is welcome.  But economies around the world remain iffy, far from robust which stock markets are betting on.  There was another reminder today that Europe continues to have a shaky recovery.  Nobody what's what's really going on in China, as usual.  The US economy my appear stronger, but that has been called into question after 0.1% growth in Q1 which could be revised to a minus later this month.  Strength in tech stocks may be nothing more than bargain hunting in an oversold area (no legs).  That advance came at the expense of yield stocks.  Sorry, problems with chart posts above.

Dow Jones Industrials

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