TheStreet.com's DAILY BULLETIN
March 6, 2000
Market Data as of Close, 3/3/00:
o Dow Jones Industrial Average: 10,367.20 up 202.28, 1.99%
o Nasdaq Composite Index: 4,914.79 up 160.28, 3.37%
o S&P 500: 1,409.17 up 27.41, 1.98%
o TSC Internet: 1,221.10 up 56.99, 4.90%
o Russell 2000: 597.88 up 13.84, 2.37%
o 30-Year Treasury: 101 20/32 up 2/32, yield 6.117%
Companies in Today's Bulletin:
BP Amoco (BPA:NYSE)
Deutsche Telekom (DT:NYSE ADR)
In Today's Bulletin:
o Editor's Letter: The Coming Week on TSC
o Market Roundup: Weekend Report: Qwest Appears Involved in 3-Way Merger Plans
o The Coming Week: The Coming Week: Market Seeking Answers to Tech-Rally Puzzlement
o The Coming Week in Europe: Springtime Is the Right Time for European Telcos
Also on TheStreet.com:
Wrong! Rear Echelon Revelations: We Need a Big Bear on the Seesaw
Without some heavy money betting against it, the Nasdaq's rise to 6000 will be slower than many expect.
This Week in IPOs: A Short-List for IPO Research
Ben lays out a few favorite tips on what to watch for when a company goes public.
The Coming Week in Asia: The Coming Week in Asia: Japanese Steel Girds for Trouble
Nissan's paring the numbers of suppliers, and other carmakers look set to follow. More PlayStation2 fever.
Jim Griffin: The Stock Markets: Disturbing Divergences
The gap between the Old and the New is both spectacular and unsettling.
Editor's Letter: The Coming Week on
3/5/00 6:22 PM ET
The markets are tense and volatile these days. The
flirts lower, then shoots higher. The
seems to know nothing about the downside. And all the gyrations have every investor scrambling for information that will help shed some light on what exactly is happening.
This week we'll dig around in Snowbird, a resort in Utah, looking for tidbits about the companies at the epicenter of the Nasdaq excitement. The schedule of presenting companies will be on the site and we'll have columnists and reporters sifting through the blarney to find the elemental truths that will help you make wiser decisions. Look for coverage from Snowbird throughout the week.
In addition, we'll be scrambling to uncover every twist and turn in the marketplace. Our joint venture news group, working in cooperation with the
New York Times
, does an excellent job of covering the latest breaking news and events. And our markets team, which has no match on or offline, will continue to decipher the latest strange happenings in the financial markets. We're watching closely so that you won't get surprised by any sudden, sharp turns.
Also, I 'd like to thank everyone who participated in our online broker survey. This survey, with more than 10,000 respondents, will provide you with the most in-depth overview of the brokerage industry you've ever seen, and will be driven by your feedback rather than that of self-proclaimed experts. We're crunching the numbers now and look forward to getting you the results soon.
A final note, if you haven't had a chance to check out our sister site in the U.K.,
www.thestreet.co.uk, I encourage you to do so. The site includes markets coverage, commentary and insight on the issues affecting U.K. and European stocks. It's a free site, though it does require registration. If you've got any comments about the U.K. site, please feel free to email me at
As ever, you can also email me with any other comments or concerns. I'll make sure your issues are addressed.
So get ready for another exciting week of investing. We'll be out there hustling for you!
L' Etoile du Nord
Dave Kansas is editor-in-chief of TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at
Market Roundup: Weekend Report: Qwest Appears Involved in 3-Way Merger Plans
Special to TheStreet.com
3/5/00 8:49 PM ET
Mum was the word this weekend on talk of a three-way telecommunications merger and an Alaskan oil selloff. Perhaps people are starting to take Sundays off for a change?
Amid renewed discussions over their planned acquisition of
, the top executive and biggest investor at
are looking to sell their company,
The New York Times
reported Saturday. Germany's
, rumored to be interested in buying both companies, did not make any announcements concerning such an offer this weekend.
Meanwhile, Deutsche Telekom has made an offer for the U.K.'s
Cable & Wireless
The Sunday Business
newspaper in London reported.
also was reported to have made an offer.
is in talks with three oil companies interested in buying the Alaska operations of
The Sunday Telegraph
in London reported. The newspaper named
as the interested parties. BP is planning the divestiture to avert a court battle with the
Federal Trade Commission
, which has objected to its proposed merger with Arco on antitrust grounds.
Industry sources also tell
that because high oil prices have boosted the value of Arco's Alaskan assets, any BP takeover would likely be reduced in scope.
The FTC, meanwhile, may challenge the joint purchase of industrial-gas maker
Air Products and Chemicals
, sources tell
. The news agency says FTC lawyers are skeptical that the companies will be able to divest themselves of plants, as government regulators are asking.
In the race to break the computer-processing speed limit,
Advanced Micro Devices
of Sunnyvale, Calif., announced Monday it has begun shipping one gigahertz processors. Analysts told
they were also expecting
to announce a one gigahertz processor this week.
The United Arab Emirates will buy 80 F-16 fighters from
for $6.4 billion, both sides announced. The planes will be shipped from 2004 to 2007.
plans to buy a 5% stake in
, the Japanese business daily
Nihon Keizai Shimbun
reported Monday. The automaker plans to buy the shares from top shareholder
for 10 billion yen, or $92.7 million, the newspaper said.
could feel the sting of South Carolina's tourism industry. The
National Association for the Advancement of Colored People
is considering a boycott of the beverage giant following African-American employees' allegations of discrimination and racism,
reported. Since Jan. 1, the
has waged a tourism boycott of South Carolina because of the Confederate flag atop the Statehouse.
In Other News
Food made with genetically modified crops will not be allowed to be sold under the organic label under the new rules the U.S. Department of Agriculture plans to announce within the next few days,
The New York Times
reported Sunday. The regulations also bar irradiation and the use of sewage sludge as fertilizer in organic-labeled food, the newspaper said.
The cover story in the latest issue of
Clear Channel Communications'
buying binge may be slowing. The company, which last week announced it was acquiring
, faces the same challenges confronting the radio industry as a whole: competition from satellite radio and small broadcasters.
may well be the world's largest company by 2003, with 100 million customers and a market capitalization of $1 trillion or more, an analyst predicts in
. The company's successful takeover of Germany's
makes it the only true worldwide wireless company, the news magazine notes.
also features an interview with Tony Orphanos, manager of the
Howard Equity Fund
in New York. His stock picks include
David Rheingold is a New York-based freelance writer. At the time of publication he was long Intel, although holdings can change at any time.
The Coming Week: The Coming Week: Market Seeking Answers to Tech-Rally Puzzlement
3/3/00 7:00 PM ET
Tech stocks keep running higher, and so does Wall Street's general sense of bewilderment.
That the asset class with the richest valuations is running higher despite the
apparent inclination to continue raising interest rates until the economy slows is an entirely new thing. In the past, whenever economic growth has heated up to the point where the Fed feels it needs to crash the party, it's been a signal to shift into cyclical stocks. This makes sense, because the latter stages of economic growth are usually the time when commodity producers start to get pricing traction. And in fact, this is exactly what's happened lately -- commodity prices
on the upswing.
But cyclical stocks are not. The
Morgan Stanley Cyclical Index
is down 18.1% this year. Meanwhile, the
Morgan Stanley High-Tech 35
is up 16.7%.
"We're in a very interesting situation," said David Bowers, the new chief investment strategist at
, "where either the old model is breaking down, or the market is chasing the wrong sectors."
This, Bowers reckons, is where the battle lines in the market will be drawn in the weeks to come. Some players will adhere to the notion that tech stocks are immune to interest rates, that the demand for technology is so strong that profits in the sector will continue to move ahead at a quick pace even if the overall economy slows.
And ranged on the other side will be those who think that even for tech, interest rates will matter. One argument for this is that a major factor in economic growth has been the performance of tech stocks. So to slow the economy, the Fed needs to slow tech stocks.
"The stock market continues to see an enormous shift out of traditional, old-economy stocks to new-economy stocks," said Richard Berner, chief U.S. economist at
Morgan Stanley Dean Witter
. "The rally in the stock market is being primarily driven by that. That means the Fed, quite frankly, will have more work to do."
Nasdaq Composite Index
knocking on 5000, one wonders how much of a role tech-stock gains specifically play in any wealth effect. It seems like a good guess that they have an outsized influence. Many investors may not really think of their tech-stock gains in the same way they think about the money they've put in their 401(k)s. Then there are those lucky people who have options in tech companies at a very low cost basis -- they, too, may have more of a penchant to spend freely.
Unfortunately, there's no way to quantify whether tech-stock gains influence spending in any way differently from gains in other stocks. "I have been asking myself that question," said Berner. "It's a good one. Don't have the answer."
The two big economic events of the coming week should have something for new- and old-economy types alike. On Monday, Fed Chairman
will give a talk on technology and the economy. If he sticks to recent form, he will probably shy away from the new-paradigm stuff. Yes, the economy can grow more quickly than in the past. No, it cannot safely grow as quickly as it is now.
On Tuesday, however, the revised fourth-quarter productivity report is set to come out. Many economists expect that productivity gained upwards of 6% -- a new-era number if there ever was one.
The Coming Week in Europe: Springtime Is the Right Time for European Telcos
3/4/00 12:30 AM ET
BERLIN -- Apparently telecom executives get spring fever too.
That's one way to explain the renewed spasms gripping Europe's telecommunications sector. It's barely March and yet CEOs all over the Continent are busy courting prospective merger partners as well as announcing new stock-boosting ventures and services.
Sure, some would say telecom shares, many of which are traded in the U.S. as ADRs, haven't ever been out of vogue, but in the coming week investors will likely see the current excitement surrounding the sector helping to drive Europe's equity markets higher. That was certainly the case last week.
was looking for love overseas (potentially with
) pushed Frankfurt's benchmark
index to new highs. And the soaring shares of DT's jilted partner
power ahead in Paris.
did its part for the
Perhaps some of the excitement is warranted -- the stakes for everyone concerned are certainly huge. A deal for Deutsche Telekom, giving it a foothold in the key U.S. market, is crucial for the company's hopes of becoming a global player, and investors see the corresponding potential it would have for Telekom's share price.
"A gigantic influx of investment capital has stimulated the exchange in Germany. A clear preference for
techs and telecoms is unmistakable," says Robert Halver, an equities strategist for
Delbrueck Asset Management
in Frankfurt. "The long-term appeal of the communications segment in the growth sector is clearly high in the market's estimation." Deutsche Telekom remains one of Halver's top picks.
That same excitement was evident in Paris last week. Investors were drawn to France Telecom shares after the company announced it was mulling the possible flotation of its wireless and Internet operations --just as Deutsche Telekom plans to do. Not to be left out of the mergers-and-acquisitions fandango, France Telecom has made clear for the past few weeks they will actively pursue U.K. mobile operator
, which a combined
will likely have to spin off for competition concerns. All the action is bound to keep France Telecom's stock in demand next week as well.
British Telecom wasn't so much soaring as recouping some of its recent losses. News that U.K. Trade and Industry Secretary Stephen Byers has dropped the telecommunications industry from his flagship utilities bill helped push the issue higher, as did speculation that BT could be a potential takeover target. Deutsche Telekom was named as one of the most likely bidders, although the Teuton's latest interest in the U.S. may quell such talk.
Some analysts are still betting on other telcos besides BT that are likely to seek out or be sought out by potential suitors in the coming weeks and months. Spain's
, with its strong European and Latin American presence, likely tops many a CEO's partner wish list.
For the Doubting Thomases of the spring fever/telecoms theory, one need look no further than last year this time. Deutsche Telekom Chairman Ron Sommer was wooing
executives in the hopes of creating a transalpine telco powerhouse.
The ensuing hubbub drew a lot of attention and investors' money into the sector, as many feared they wouldn't get invited to the wedding party. Sommer, in the end, got left at the altar. That the romance ended in tears could prove a cautionary tale for both investors and executives caught up in any euphoria this year.
Chat with John J. Edwards on AOL's MarketTalk, hosted by Sage, Monday, March 6 at 3:30 p.m. ET.
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