Market Roundup (APC, SII, SLB, FPL, DUK, EXC, CEG, PBS, HES, MEE)
According to a survey conducted by Bloomberg, Chinese demand and the cold US winter could send coal prices substantially higher. The price of coal is already up more than 20% from last year's lows. “If you look at the pricing increases we’re seeing now in regard to future sales, they have not only floored or held their bottom, they are starting to spike up," said Consol Chief Operating Officer Nicholas Deiuliis.
The acquisition of Smith International (NYSE: SII) by Schlumberger (NYSE: SLB) shows that the M&A logjam may be breaking up. However, analysts do not seem convinced whether the $11 billion takeover price is exceptionally high.
Utilities have indicated that they will have to cancel or downsize several electric-grid projects if taxes continue to be applied on a minimum of $2.5 billion in government grants. Some of the highest grant recipients are Duke Energy (NYSE: DUK), FPL Group (NYSE: FPL), Exelon (NYSE: EXC) and Constellation Energy Group (NYSE: CEG).
AIG (NYSE: AIG) has improved its performance and its insurance units have started generating stable revenues. AIG has also improved its ability to repay taxpayers after the bailout. The company’s property-casualty has posted sales growth for three consecutive quarters and sales of life insurance and retirement products have risen for the first time since the bailout.
Louis Bacon's hedge fund has bought big stakes in Anadarko Petroleum (NYSE: APC), Petroleo Brasileiro (NYSE: PBS) and Hess (NYSE: HES). Meanwhile, Stanley Druckenmiller snapped up shares of Massey Energy (NYSE: MEE). Why are some successful hedge funds buying energy producers? Philip Orlando: "If you believe as we do... that the U.S. and overseas economies are going to continue to grow, you want to invest in companies and industries best leveraged to benefit from that."
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