The world oil market is growing “increasingly tight” at a time when the U.S. is looking to impose fresh sanctions on Iran over its nuclear program, U.S. energy officials said.
U.S. Calls Oil Market ‘Increasingly Tight’
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Monthly Archives: February 2012
European Stocks Edge Lower
European stocks pared earlier gains to end lower after Federal Reserve Chairman Ben Bernanke quashed any hopes of further quantitative easing, while investors continued to mull over the impact of the ECB’s second liquidity injection.
Micron — To Infinity and Beyond
By Kaitlyn Kiernan
Options traders are betting on Micron, believing that a bankruptcy of a rival and an expanded partnership with Intel will help push computer chip maker’s shares even higher this year.
Micron shares jumped nearly 12% in the first two days of trading this week after investors learned that a rival Japanese chip maker Elpida Memory filed for bankruptcy and as Micron expanded its agreement in a joint venture with Intel.
“The bankruptcy is likely to usher in a new era of DRAM consolidation, and will likely help drive continued positive fundamentals for [Micron],” MKM Partners analyst Daniel Berenbaum, who raised the company’s 12-month price estimate to $11 a share, wrote in a note yesterday. “We view Elpida’s bankruptcy as a clear and significant positive for [Micron].”
Micron shares have added 36% to $8.56 so far this year to erase 2011′s nearly 28% slump.
Adding to the good news that depressed chip prices may see relief as production drops was an announcement Tuesday that Intel and Micron will expand a partnership in chips known as flash memory.
In the options market, traders were betting that the Elpida and Intel news will help Micron’s stock build lasting gains. The largest single trade Monday was a bullish strategy that the shares could add another 30% by the middle of April.
One trader bought an opening trade block 45,000 April $11 calls while selling a block of 13,500 April $9 puts, said Fred Ruffy, an analyst at WhatsTrading.com. On top of that, the trader bought 50,000 March $10 calls, for a net profit on the trade of about $90,000 before commissions and fees.
“This is a pretty aggressive play betting on the stock to move up above $9 by April, and possibly above $11,” said Ruffy. Additionally, the March play is a bet the stock can add an additional 17% by expiry, which falls the week before Micron is expected to report fiscal second quarter earnings.
Train Reading: Investors Beware Of Your Own Biases
How an investor’s own heuristics, biases and cognitive deficits impact his/her views — Barry Ritholtz
Confessions of “The Reformed Broker” – Bloomberg Businessweek
Emerging markets will be hit hardest by a wave of elections — FT Aplaville
Why the risk-on rally will not last –FT.com
Ben Bernanke is a dove because Congress isn’t — Bloomberg Businessweek
Probe Targets Goldman Manager
Criminal authorities are investigating whether a top Goldman Sachs manager passed inside information about technology stocks to the firm’s hedge-fund clients.
Recovery Worries Weigh on Stocks
Stocks ended a strong month of gains on a weak note, after Fed Chairman Ben Bernanke took a cautious view of the U.S. recovery. Jonathan Cheng has details on The News Hub. The Nasdaq briefly hit 3000 for the first time in 11 years. Photo: AP
Data Points: U.S. Markets
Dow Industrials,
up 319.16 points this month, or 2.53%, to 12952.07.
- Up 2,038.69 points, or 18.68%, over the last five months.
- Today, it is down 53.05 points, or 0.41%.
- Today’s top contributors to the Dow’s movement and their point contribution: KO (7.64), UTX (3.03), HD (2.57), WMT (1.14), PG (0.98).
- Today’s laggards and their point contribution: CAT (-11.73), IBM (-9.46), AXP (-6.58), HPQ (-6.58), XOM (-4.84).
- Year-to-date it is up 6.01%.
Nasdaq Composite,
up 153.05 points this month, or 5.44%, to 2966.89.
- Up 361.74 points, or 13.89%, over the last two months.
- Today, it is down 19.87 points, or 0.67%.
- Year-to-date it is up 13.89%.
S&P 500,
up 53.27 points this month, or 4.06%, to 1365.68.
- Up 118.72 points, or 9.52%, over the last three months.
- Today, it is down 6.50 points, or 0.47%.
- Year-to-date it is up 8.59%.
Tomorrow’s Tape: Jobless Claims, ISM And More Bernanke
- Reuters
Economics/FedSpeak:
- Jobless Claims: Median forecast says claims edged up 355,000, from 351,000 in the prior week.
- Personal Income: Expectations call for a 0.4% rise in January, from a 0.5% gain a month earlier.
- Consumer Spending: Projected up 0.4% in January from unchanged in December.
- ISM Manufacturing: Expected to rise to 54.9 this month from 54.1 a month earlier.
- Construction Spending: Consensus calls for a 1.0% gain in January compared to a 1.5% rise a month earlier.
- Federal Reserve Chairman Ben Bernanke delivers second day of semi-annual testimony.
- Other Fed officials speaking include Sandra Pianalto, Sarah Bloom Raskin and Dennis Lockhart.
Earnings
- Ascena
- Bio-Reference Labs
- DineEquity
- Dresser-Rand
- Esterline Tech
- Flow Intl
- Foot Locker
- James River
- Kenneth Cole
- Kroger
- Mitel
- Quanex
- Southern Union
- Weingarten Realty
- Wendy’s
Big moves in bonds, gold, silver; Stocks end flat
While stocks ended slightly lower, Wednesday’s biggest market moves were in the bond, commodity and currency markets — with 10-year Treasury yields surging higher and the price of gold, silver and the euro dropping dramatically.
Stocks Drop; Tea Leaves Don’t Form ‘Q’ Or ‘E’
- Associated Press
U.S. stocks slide one day after the Dow catapulted the 13000 level for the first time in nearly four years.
Dow industrialsdropped 54 points (0.4%) to 12952, the S&P 500 lost 7 points (0.5%) to 1366, and the Nasdaq fell 20 points (0.7%) to 2967, after briefly touching the 3000 mark during the session.
There were a lot of cross currents today.
The ECB doled out another 500 billion euro in cheap, three-year loans to banks. The Fed’s Ben Bernanke offered his usual measured take on the economy in his Congressional testimony. What he didn’t do was drop any concrete hints that another bond-buying program, the proverbial QE the market loves so, was on its way.
Silver Lining For Euro: ‘Carry Trade’ Role Won’t Add Pressure
By Neil Shah and Matthew Walter
The euro may be unloved by investors around the globe, but it’s unlikely to be dragged down by the dreaded “carry trade.”
For years, Wall Street analysts have speculated that the euro could suffer at the hands of this investment strategy, which involves borrowing money in countries where loans are cheap and investing the proceeds where interest rates–and therefore returns on investment – are higher.
The euro’s day of reckoning seemed at hand Wednesday after the European Central Bank handed out EUR530 billion in cheap three-year loans to help the region’s banks. Europe’s common currency dipped against the U.S. dollar after the ECB announcement, while the high-yielding Australian dollar–a popular target for carry-trade investors–hit a six-month high.
But the euro’s slide only accelerated hours later, after Federal Reserve Chairman Ben Bernanke gave few signs in congressional testimony that the central bank is preparing more economic stimulus–news that also whomped the Australian dollar.
The common currency’s jerky moves indicate the market’s still not sold on a euro-driven carry trade. The reason: carry trade currencies are supposed to be predictable in the way they move, the better to pocket the difference between two countries’ interest rates over long periods of time.
The euro, at the center of a sovereign debt crisis, bounces around way too much.
“The euro is just too volatile,” says Constantine Ponticos, managing director of research at Pareto, a firm that manages some $45 billion in currencies. Pareto is a unit of Bank of New York Mellon Corp.
Ponticos thinks the euro will fall against the dollar this year thanks to Europe’s struggling economy–not the carry trade. And he’s not using euros to buy other currencies.
“A carry trade is a long-term trade,” he says. “If you’re going to hold onto something for a long period of time, you need to be cognizant of the volatility.”
To be sure, investors said there’s been an uptick in short-term trades that involve selling euros and buying other currencies. Norway’s krone, for example, hit a new nine-year high against the euro Wednesday.
But the dollar is likely to remain a more attractive currency to borrow to invest in countries with higher interest rates and better growth prospects, such as Australia, Russia, Canada, Mexico and Poland, said Jonathan Clark, vice president at FX Concepts, one of the world’s largest currency hedge funds.
“If you are bullish on risk, you do it in dollars,” he said.
(This is a column appears on DJ FX Trader, a premium forex news service of Dow Jones & The Wall Street Journal. For the full version, click here.)
Data Points: Energy & Metals
Nymex crude
for April delivery gained $8.59 per barrel this month, or 8.72% to $107.07.
- Best month since October 2011.
- Today Nymex Crude Oil gained $0.52 per barrel, or 0.49%.
- Year-to-date it is up 8.34%.
Comex gold
for March delivery lost $27.90 per troy ounce this month, or 1.61% to $1709.90.
- Today Comex Gold lost $77.10 per troy ounce, or 4.31%.
- Largest one-day percentage decline since Wednesday, December 14, 2011.
- Year-to-date it is up 9.20%.