Coeur d’Alene Mines (CDE) Bad day for commodities stocks. Drifts down to $1.62 from 52-week high of $5.18
Newfield Exploration (NFX) Crude down $6. Bad day for oil exploration stocks. Falls to $39.98 from 52-week high of $69.77.
McDermott International (MDR) Oil and gas equipment supplier. Drops to $31.14 from 52-week high of $67.14.
With a $6 a barrel drop in oil prices, this was supposed to be one of the best days of the year for the stock markets. The Nasdaq opened up 55 points at 2,402 and then reversed itself to trade down .5% at 2 PM. The S&P 500 moved up almost 20 point in early trading and then swung down .2%.
The market has made a simple decision. The economy is not getting any better. It is getting worse. Oil at $110 will not help enough to offset falling personal income, rising unemployment, a tough housing market, and attrition in corporate spending.
Chesapeake Energy (CHK) announced today that it will create a joint venture with the US division of BP plc (BP) that will give BP a 25% stake in Chesapeake’s Fayetteville Shale assets in exchange for $1.9 billion. Following the transaction, BP will own about 135,000 net acres of Chesapeake’s current 540,000 net acre leasehold.
As part of the deal, BP pays $1.1 billion up front, in cash, at closing, and the remaining $800 million by funding drilling and completion expenses through the rest of 2008 and into 2009, until the money runs out. But that’s not the best part for BP. If Chesapeake acquires any future leaseholds in the Fayetteville Shale play, "BP will have the right to a 25% participation in any such additional leasehold."
24/7 Wall St. asked Sprint (S) CEO Dan Hesse a few questions.Here are his answers.
24/7: Sprint has clearly had trouble with customer service which has shown up in studies like JD Power. You have hired some impressive management to sharply improve that and the move has been heavily covered by the press. What Wall St. and your customers seem to want to know is when will there be a significant enough change in service so that it is on par with your largest competitors?
Merck (MRK) and Schering-Plough (SGP) make two of the most widely sold drugs in the world. One is cholesterol drug Zetia. Another is a related drug called Vytorin. The sales of the treatments topped $5 billion last year.
Zetia and Vytorin are more examples of how little the FDA cares about the health of the general population.
The Commerzbank buy-out of Dresdner Bank was not a shotgun wedding. Neither institution was failing. The severe balance sheet problems facing may other global money center banks were not an important consideration.
The Commerzbank decision was based simply on added scale and eliminating costs. Media reports are that at least 9,000 people will be cut out of the new company. But, the action does add a level of preparedness if the credit markets get much worse.
Earlier this year, it did not take much to disrupt the price of oil and send it rocketing up. The market was inclined to believe that almost all news about crude was bad news. OPEC was aligned against US interests. Demand in China was insatiable. Speculators were making hundreds of millions of dollars manipulating prices higher to profit from their long positions.
Most of that has clearly changed, but the evidence from Gustav’s run through the Gulf shows that it has changed more than expected and that the alterations may be nearly permanent.
In his latest column for The New York Times, Mark Hulbert discusses a study that shows that companies that invest aggressively in research and development tend to reward shareholders with strong returns over the long-term. He writes that ". . . when times are tough, beware of companies that cut their spending on research and development. The stock market tends to punish such businesses and reward those with a commitment to R.& D. — often years before long-term projects reap benefits."
According to Reuters, the manufacturing sector probably did not grow in August
Reuters reports that it appears Gustav did little damage to oil rigs and refineries.
Reuters reports that the Korea Development Bank confirmed it was in talks with Lehman (LEH).
Reuters writes that Alcatel-Lucent (ALU) named new management.
Markets in Asia fell.
The Nikkei was off 1.8% to 12,609. Bridgestone was up 3.5% to 1850. Canon was down 7.3% to 4670.
The Hang Seng dropped 1% to 20,689. China Life (LFC) rose 2% to 27.55. China Netcom (CN) rose 1% to 18.42.
The Shanghai Composite fell .9% to 2,305.
Data from Reuters.
Douglas A. McIntyre
Markets in Asia fell.
The Nikkei was off 1.8% to 12,609. Bridgestone was up 3.5% to 1850. Canon was down 7.3% to 4670.
The Hang Seng dropped 1% to 20,689. China Life (LFC) rose 2% to 27.55. China Netcom (CN) rose 1% to 18.42.
The Shanghai Composite fell .9% to 2,305.
Data from Reuters.
Douglas A. McIntyre
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