Crude oil --- Su (fast)
Nasdaq --- Brett (slow)
>> crude oil is down, so crude is down 2% right now. we’re trading under $71. in about 20 minutes from now, secretary of state condoleezza rice will make the announcement official and give more details about the u.s.’s plan to join european talks. of course, bloomberg television will carry that announcement live for you. in the mean time, we want to send you to the nymex to get scenes of the trading. su keenan is down there.
>> in terms of natural gas, suzy, we are lower across the board. we had an intensified trading right behind me in the oil pit. right about five to 10 minutes after the hour when the headlines started crossing. the concern or the reduction and concerns about iran as fimat’s john kilduff says that the u.s. will be willing to accept a draft resolution on sanctions by the u.n. security council that does not absolve the use of investors. it is the use of force in sanctions against iran and retaliation that could lead to disfluppings iran’s oil supply. they are one of the four top oil producers and has been driving prices higher for months now. take a look at the 30-day chart and you get an idea of how we’re pulling back four times in the past 30 days we have been above the $74 mark. of course, $75 is the record. yesterday we flirted and moved higher on concerns that iran was taking us down a road to a greater conflict. and when we did not break above $73, analysts say we quickly moved back. and now we have been within 10 cents of the $70 level. it will be an interesting trading day as we go forward.
>> thank you very much. su keenan for us.
>> as for our market , we are seeing them climb higher. brett gering at the nasdaq and julie hyman at the nyse. julie taking a look at economic growth slowing at least according to one analyst talking a about that this morning. recommending pair trading to go long one group and short another. what they are recommending this morning is folks go long utility stocks and short or underweight material stocks. they are saying that the underlying premise here is that inflation expectations have peaked and are heading lower alongside global economic growth. the idea here is that global economic growth slows, that will be to the detriment of many of the materials companies that have benefited from strong demand globally, strong demand for metals, for example, especially coming out of china. on the other hand, utilities will be able to benefit as after these inflation expectations peek and then come down, utilities with the relatively high dividend yield will look more attractive. what’s interesting is if you look at the activity in these two particular groups and the performance in the two particular groups, what bca research is looking at are the s&p 500 materials index and the utilities index. the s&p 500 measures of those. and if you look at the utilities index, it is up about half a percent year to date. the materials have fout outperformed it and up 5.5% year to date. then look at the shorter time horizon and what’s happened in the past month. we have already started to see what they are talking about here is that is the utilities are up 1.2% helped today by the potential takeover in that industry. materials in the meantime down about 4.5%, so already materials are starting to fall by the wayside. utilities have started to takeover leadership a little bit. folks at bca saying you should try and bet on the difference in fortune for what will be happening with the two groups for the next several months. interesting idea there. and now i’m sure we’ll get more interesting ideas from brett gering. we’re going to go to him at the nasdaq.
>> one interesting idea here at the nasdaq playing out today is from advanced microdevice. advanced microdoes not strade on the nasdaq, but as you know, a.m.d. has taken market share from rival intel over the past few months and that has sent the stock up, but a.m.d. is now supposedly speculating to buy a specialty chip maker known as a.t.i. technologies, which does trade here on the nasdaq and as you can see there, that stock is up 7.33% on the speculation. that coming from an analyst at r.b.c. capital markets . and he says that for to make sense of this is the announcement by a.m.d. to significantly increase capacity over the next few years. a.m.d. looking to get into other markets to expand the offering to shareholders. he expects more announcements out of dell to use chips in some of the other products. to weeks ago dell saying it would use a.m.d. chips in some of the servers. we haven’t heard the last of that from dell. where does this leave dell? they don’t believe they should hook up with a graphics company but rather look at the communications space. this current quarter is getting progressively worse for intel.
>> all right. thank you very much. when we come back, an update on what the u.s. says it may be willing to talk to iran. an update on that next.
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Listen On the market --- Suzy (fast)
Interview: Chris Conway --- Conoco Phillips
>> everybody. if you are just joining us, you are watching “ on the markets .” i’m suzy assaad. your top stories at this hour start with manufacturing growth which is picked up in the chicago area. that at least is the finding of the survey that was done in may be the purchasing managers. and we’re going to get more clues on the federal reserve’s thinking about rates and inflation. minutes from the may 10 meeting will be released at 2:00 p.m. washington time. and a billion dollar takeover from the telecom equipment industry and stocks expand the wireless products. as for the equity markets , they are higher this morning up about half a percent and the dow is up 52 points and the s&p is up almost seven. the nasdaq is up almost 12 points right now. year to date the nasdaq is down 1.33%. and the treasury markets on the quiet side with the yield on the 5.06. and in the meantime, wholesale natural gas customers and they think it will be lower than what it was last year. this summer is expected to be warmer than normal, but not as hot as it was last year. chris conway is president of the gas and power at conoco phillipses and the chairman where he comes to washington where he wrapped up the announcement. chris, welcome to the program. first of all, give us details on the announcement and your expectations for the summer.
>> good morning, suzy. today we’ve finished, i think, an analysis of fundamentals for the gas market this is summer. we’ve looked back on what happened last summer and compared year to year. and we really see a flat influence on price going forward. certainly weather, although predicted to be warmer than normal this summer, not as warm as last year. there are some wild cards in the marketplace. certainly hurricanes we all remember what happened last year and those could be a wild card again this summer.
>> how much of a wild card could the hurricanes be? they are predicting a season that is as bad as last or at least maybe not as bad but certainly up in the same area. how much of a wild card is that going to be?
>> well, i think the predictions i have seen from noaa are somewhat less in terms of potential number of storms this coming summer. i think the industry has been applying the lessons learned from last year and is in a better state of preparation to deal with any potential impacts.
>> do you think that the demand fundamentals are pretty much the same for this year as what you saw last year then?
>> we have looked at consumption. consumption and there has been ups and down. the economy is strong and we’re seeing some industrial production or demand picking up. we also see more residential consumers burning natural gas, but seeing some conservation in that area. so some ups and downs, but in general flat across the board.
>> what, then, -- i know you don’t necessarily forecast prices, but given what your outlook is for demand and given the caveats that we said with the wild cards and the hurricanes, what range would your expectations be for natural gas prices for this summer?
>> well, again, we’re not a price forecaster, so i’m going to shy away from giving any personal views about price, but i think we’re really seeing flat year on year influence on price and in the absence of the wild cards should be in this kind of current range.
>> chris, you also, of course r president of conoco phillips and we wanted to ask a couple of questions with that in mind. first off that the acquisition that you have made more recently which was, of course, burlington resources and you paid around $35 million, some market watchers are saying that that was a very expensive price to pay. and they think that―or at least there’s a question as to why is it that you are not putting on any hedges to the natural gas production to guarantee the returns from the acquisition. why is conoco phillips so worried about hedges especially at a time where inventories are filling and looks like prices could be going down?
>> as far as commenting on hedge, i’m not sure i can give you any facts or information of use there. i do think the company is reinvesting in energy infrastructure both in the u.s. and internationally. and it’s focused on bringing more supply to the u.s. and will continue to do so.
>> let me ask you about that freezing rain structure investment. part of that infrastructure investment, of course, is the pipeline from alaska that conoco phillips is involved in. i believe it was $20 billion natural gas pipeline. and you are all bidding or working on that. but there is so many other projects going on and specifically there is another one where i’m told that there’s a project in russia to ship liquefied natural gas directly to the united states. as more and more of these projects come on s alaskan pipeline in a little bit more danger f you will, is it slightly less necessary if we are going to find alternative ways to bring natural gas to our shores?
>> well, i think we view the alaska pipeline and developing reserves on the north slope as important to the energy future of the u.s. and will continue to pursue that project aggressively as well as international developments such as you mentioned both in russia, in another country’s developing l.n.g.―and in other countries developing l.n.g.
>> as the price of l.n.g. comes down and more of the product is being shipped and is available, does this undermein the economics of building something like the alaska pipeline?
>> i don’t know that i can comment to how future price might undermine economics. i think our view is that more supply is important and we’re going to pursue those projects aggressively.
>> all right. chris, thank you very much for being with us this morning. >> you’re welcome. thank you.
>> our thanks to chris conway who is president at conoco phillip and chairman of the ngsa, president of gas and power. i should mention that. in the meantime, we take a quick break. when we come back, we’re going to talk about crude oil which is dropping for the first time in a week after the u.s. is offering to join european talks with iran about the nuclear program. we have an update from the nymex after this.
