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Publish date:

daily02-27-00's DAILY BULLETIN

February 28, 2000

Market Data as of Close, 2/25/00:

o Dow Jones Industrial Average: 9,862.12 down 230.51, -2.28%

o Nasdaq Composite Index: 4,590.50 down 27.15, -0.59%

o S&P 500: 1,333.36 down 20.07, -1.48%

o TSC Internet: 1,176.11 down 8.45, -0.71%

o Russell 2000: 556.74 up 2.70, 0.49%

o 30-Year Treasury: 101 13/32 down 4/32, yield 6.153%

Companies in Today's Bulletin:

eBay (EBAY:Nasdaq)

Sotheby's (BID:NYSE)

In Today's Bulletin:

o Editor's Letter: The Coming Week on TSC
o Market Update: Weekend Report: Upstart eBay May Bid for Sotheby's
o The Coming Week: Rattled Market Weighs the Fear Factor
o The Coming Week in Europe: The ECB Is Likely to Hold Interest Rates Steady, for Now

How's your online broker doing? Let us know in our Online Broker Survey2000. Fill it out now, and get a chance to win a TSC T-Shirt. Fill out the survey here!

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Looking for the latest sports scores? They're right here on! Follow your favorite teams at the new TSC Sports Center.

Also on

Wrong! Dispatches from the Front: Reporter's WAVO Tale Rocks Longboat Vacation

Trying to be helpful, the trader gets roughed up.

This Week in IPOs: Palm Wednesday?

A hot week for IPOs, including a new buy and hold name!

Asia/Pacific: The Coming Week in Asia: PlayStation 2 Debuts Next Saturday

Sony, video-game makers and even Seven Eleven should benefit from the console's release.

Jim Griffin: Quiz Review: Old vs. New

Jim Griffin considers the Fed's effect on Old and New economy stocks.

Editor's Letter: The Coming Week on



Dave Kansas


2/27/00 5:28 PM ET



below 10K. It's not the kind of thing that makes for pleasant headlines. But at the same time, the


keeps rocketing higher. It's a divergence that has many investors scratching their heads.

We're doing our best to sort through the issues, analyzing the various theories that try to explain what is happening in the stock market. It is a confounding time, and we're more focused than ever on trying to explain precisely what is happening. If you've got ideas or suggestions or questions about what's happening, fire me an email and we'll get a writer on the case.

As we sort through the chaotic market, many of you are sorting through online brokerage firms, trying to figure out who offers the best service. Indeed, it is a vexing question -- who are the great online brokers? The millions who invest online are very eager to know the answer to that question. Usually you see brokers boasting about high ratings from various, faceless groups who make declarations from on high about the industry.

But who better to judge this industry than you? We've put together a survey that's already been filled out by many of you. We'd like to get more feedback so we can together produce the very best analysis of this very important industry. Together we can help investors find the right online brokerage home for their investing style. Check out the survey at

We'll compile the survey results and give you the most comprehensive, investor-driven overview of the industry. It'll be excellent.

The survey is only one of the special features we're working on. In recent days we've added sports scores through our partnership with

Fox Sports

. If you've got suggestions on how we can improve our sports service, please let me know at I'll put it in the pipeline.

Lots happening out there in the investment world, and we're more focused than ever on providing you scoops and analysis, news that will help make you money. With

you're not just "watching" the market, you're in with the players.

L'Etoile du Nord

Dave Kansas


Market Update: Weekend Report: Upstart eBay May Bid for Sotheby's


David Rheingold

Special to

2/27/00 7:34 PM ET

If you were stunned when

America Online


announced it was buying

Time Warner


, then brace yourself for an even bigger dose of culture shock.

Online auctioneer


(EBAY) - Get eBay Inc. Report

could make a $1.6 billion bid for


(BID) - Get Sotheby's Report

, which lately has been operating under the cloud of a price-fixing probe, a London newspaper reported Sunday.

Citing unnamed industry sources, the

Independent on Sunday

reported that five-year-old eBay was said to be interested in buying 256-year-old Sotheby's.

An eBay spokesman declined comment on the report Sunday. Representatives from Sotheby's could not immediately be reached for comment.

Such a pairing would combine a venerable auction house whose sales have ranged from


Garcon au Gilet Rouge

to the jewels of the

Duchess of Windsor

with an online start-up that has gained popularity for an array of arcane goods such as nose-hair trimmers, adult videos and dog biscuits.


Justice Department

has been investigating price-fixing allegations involving Sotheby's and rival


. In addition, the two auction houses face dozens of civil lawsuits accusing them of collusion.

Amid the turmoil, Sotheby's lost two key executives last week. A. Alfred Taubman resigned as chairman and Diana Brooks stepped down as president and CEO.

According to the

Independent on Sunday

, Christie's is cooperating with the federal investigation in exchange for immunity, a deal that has increased the pressure on Sotheby's.

Last year, Sotheby's launched an online auction site with

(AMZN) - Get, Inc. Report

. At the time, Amazon's stake in Sotheby's was about $45 million.

In Other News

French and American food groups were preparing this weekend to make a joint bid for the U.K.'s

United Biscuits

, sources told


. The bid could be valued at around $2 billion, although the two sides are still negotiating how to split up the company. The U.S. group,

Burlington Biscuits

, is made up of



and Texas buyout firm

Hicks, Muse, Tate & Furst

. The French group,


, includes

Groupe Danone






and an affiliate of

Deutsche Bank


Danish brewer


is denying a report in the

Mail on Sunday

newspaper that it is up for sale and is in buyout talks with


(BUD) - Get Anheuser-Busch InBev SA/NV Sponsored ADR Report

. In fact, the company tells


it is considering making a bid for the brewing division of the U.K.'s



Planet Hollywood


is hoping a listing on the


will save the beleagured restaurant chain. London's

Sunday Telegraph

reported that the company will announce details this week of a plan to raise $30 million in capital.

AOL Europe

customers will soon be able to access banking services via mobile phones. The company, a joint venture between

America Online



, is set to announce an alliance with

Deutsche Bank



reported Sunday.

Meanwhile, a separate U.S.-German joint venture was announced Saturday:

Siebel Systems



Deutsche Telekom

(DT) - Get Dynatrace, Inc. Report

will supply online business software to medium-sized businesses in Germany.

Following three days of talks,


(BA) - Get Boeing Company Report

was unable to reach an agreement with its engineers' union Saturday. About 18,000 workers have been on strike since Feb. 9.

In the Papers

Forget your palm-sized organizer. The cover story in the latest issue of


makes the bold prediction that such handheld gadgets will become obsolete within five years as cellular telephone technology races ahead.


also features an interview with Donald L. Luskin, H. Davis Nadig and Maurice Werdegar, managers of South San Francisco's


, whose entire portfolio, as well as every transaction, is posted online. Their stock picks include

Wave Systems



Terayon Communication Systems




(QCOM) - Get QUALCOMM Incorporated Report


PE Corp.-Celera Genomics



JDS Uniphase



Harris & Harris



Globalstar Telecommunications



Electric Fuel



The Sunday edition of the

New York Times

takes a closer look at

Hughes Electronics


, whose booming


service poses a threat to cable companies. The company remains a subsidiary of

General Motors

(GM) - Get General Motors Company (GM) Report

, although the


notes that Hughes has begun recruiting independent board members and is selling its research lab in Malibu. Could a spinoff be in the works?

David Rheingold is a New York-based freelance writer. At the time of publication he had no positions in any of the securities mentioned, although holdings can change at any time.

The Coming Week: Rattled Market Weighs the Fear Factor


Justin Lahart

Associate Editor

2/25/00 7:56 PM ET

There is nothing new in saying that the

Dow Jones Industrial Average

has been in trouble. Loaded with old-economy components, it is representative of the wide swath of American companies whose stocks have suffered for the last half-year and more.

But the Dow's drop below 10,000

Friday, to its lowest close since April 6, brings home the trouble with the U.S. stock market. Although technology stocks continue to put in strong performances, most other sectors have done woefully. Drugs, banks, consumer cyclicals -- all are at levels not seen since the market got taken apart in October 1998.

And 10,000 does other things, too. Big round numbers can carry psychological importance in the market, and that the index bounced off this one last fall brings more weight to it. As does commentators' constant carping on it (including this right here).

Funny, considering how easily the Dow blew through 10K last spring.

"We forgot to give 10,000 its due attention on the way up, so now it's demanding attention on the way down," said John Bollinger, president of

. "These milestones, they always assert undue influence. And the Dow, despite its denigration by many analysts, is still the stock market for most of the people in America."

It may be that the way the Dow fell through 10,000 Friday portends a turn in the market. There was a feeling of capitulation in the selloff, and that sometimes signals a reversal. If the market is not scared yet, a little time with a four-digit handle may awaken a little fear, setting stocks up for a rebound.

Whether that happens is question No. 1 for the coming week. Question No. 2 is whether tech can continue to perform well despite the rest of the market having fallen apart around it. Rightly or wrongly, the idea that tech is well insulated from the effects of further rate cuts has caught hold on Wall Street. The Dow is more than 14% down on the year. The

Nasdaq Composite Index

is up nearly 13%, having touched a new high

Thursday. Not everyone thinks that divergence can continue much longer.

"The risk is that to the extent the


engineers a slowdown, maybe the technology sector's customer base slows, and thereby tech revenues begin to feel the pinch," said Tom Van Leuven, stock strategist at

J.P. Morgan


That thought is at odds with what seems like the market consensus, which reckons companies will need to continue to invest heavily in tech to remain competitive -- never mind the bottom line. Perhaps that's true, but only up to a point -- at some point rate hikes will force companies to cut even tech spending. Whether the Fed will end up raising rates that much, however, will depend a lot on whether the economy begins to cool off a bit. And whether the economy starts cooling off? That may depend a lot on whether tech stocks, whose surge has helped spur consumer confidence, slow down.

"The stock market plays a big role here," said Josh Feinman, chief economist

Deutsche Asset Management Americas

. "It is likely to take some combination of higher interest rates and a cooler stock market to control the economy."

There's little doubt that the economy continues to move at a pace too quick for the Fed's liking, and that rates will be raised another quarter-point when the

Federal Open Market Committee

meets again in March. And the economic data due out in the coming week seem unlikely to do anything to detract from that sense. The big reports will be the February

Purchasing Managers' Index

on Wednesday and, most important, the February

jobs report

on Friday.

"I think that the underlying trend is that the economy has a lot of momentum," said Feinman. "Everything is still looking very, very strong. You have to think the Fed is tilted toward tightening for the foreseeable future."

The Coming Week in Europe: The ECB Is Likely to Hold Interest Rates Steady, for Now


Marc Young

German Correspondent

2/26/00 12:30 AM ET

BERLIN -- Everybody knows interest rates in the eurozone aren't likely to linger at their current 3.25% for very long, but the exact timing of the next hike is uncertain.

Although many observers believe the

European Central Bank

will let the last quarter-point hike from Feb. 3 sink in for awhile before moving again, an outside chance remains Europe's monetary authorities could increase borrowing costs in the 11-nation euro area as soon as the coming week.

The uncertainty is partly a function of the relative newness of ECB as an institution but also because Europe's central bankers have often botched the job of appropriately telegraphing their intentions to the market. Speculation over next Thursday's meeting of the bank's Governing Council has been heightened because so far the bank has only announced changes in monetary policy at the first of its two monthly meetings. This presumably occurred because only the first meeting includes a press conference for President

Wim Duisenberg

to explain why they did the deed.

Luckily for those allergic to higher interest rates, however, data on Friday appeared to show Europe's recovery might not accelerate to a dangerously breakneck pace. Besides modest inflation figures for France and Germany, one of the ECB's most-watched indicators, M3 money supply, accelerated at a slower 5% rate than had been expected in January. Although the ECB has warned money supply figures could be volatile in the first couple years of monetary union, the decrease may allow the central bank to hold off a bit longer before ratcheting rates upward again.

"Anything that takes the market's mind off imminent interest rate hikes, preventing the ECB from being boxed in a corner by market expectations at each ECB meeting, is just what they need right now," says Alison Cottrell, an economist for

PaineWebber International

in London.

The next meeting with a press conference should be an interesting one. The ECB has decided to occasionally hold their deliberations outside of Frankfurt to show that the bank sets policy with the entire eurozone in mind and not just Germany. With the March 30th meeting set to take place in Madrid a whole other set of variables comes into play. Will the ECB refrain from adjusting borrowing costs because they are in Spain, or will they purposely raise rates there to underscore how pan-European the bank is? Some observers reckon the latter seems more likely.

In its weekly European economics outlook from

Barclays Capital

in London, the attraction for a hike in Spain is made plain: "A rate move in Madrid would be a nice counterpoint to the fear expressed, particularly before the start of EMU, that a Frankfurt-based ECB would deliver an excessively austere monetary policy with 'Made in Germany' stamped on it.

A 'Made in Madrid' rate move

would prove the ECB is running a genuinely pan-European monetary policy."

An increase in rates at the Spanish meeting would certainly be deemed appropriate by many since it has long appeared as if the concerns of smaller, faster-growing economies such as Spain, Finland and Ireland were taking a back seat to the ECB's worries for the region's big laggards Germany and Italy. But whether the ECB will see things the same way is anybody's guess.

Street Sightings:

Chat with John J. Edwards III on AOL's MarketTalk Monday, Feb. 28 at 3:30 p.m. ET. MarketTalk is hosted by Sage Online.

Jim Cramer will be appearing on New York's WNYW-TV Channel 5 newscast Monday, Feb. 28 at 10 p.m.

James J. Cramer will be the keynote speaker Tuesday, Feb. 29 at the 6th Annual Internet and Electronic Commerce Conference and Expedition, at the Jacob Javits Center in New York. Click for registration information.

Vern Hayden will be a guest on CNBC's "PowerLunch" Tuesday, Feb. 29 at 12 p.m. ET.

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