daily07-11-99

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TheStreet.com's DAILY BULLETIN

July 12, 1999

http://www.thestreet.com

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Market Data as of Close, 7/9/99:

o Dow Jones Industrial Average: 11,193.70 up 66.81, 0.60%

o Nasdaq Composite Index: 2,793.07 up 21.21, 0.77%

o S&P 500: 1,403.28 up 8.86, 0.64%

o TSC Internet: 664.84 down 0.12, -0.02%

o Russell 2000: 457.98 up 3.23, 0.71%

o 30-Year Treasury: 89 20/32 down 4/32, yield 5.998%

In Today's Bulletin:

o Editor's Letter: The Coming Week on TSC
o Market Update: Weekend Report: Market Awaits Positive Earnings Reports, but Negative News Hits GM, eBay
o The Coming Week: Fully Invested Bears Quake Before an Exuberant Earnings Slate

Also on TheStreet.com:

Wrong! Rear Echelon Revelations: Gearing Up for the Big Guns

Cramer's getting ready for the upcoming earnings reports, but he's also a bit nervous about the market's recent bull run.

http://www.thestreet.com/comment/wrongrear/763547.html

TSC

Technical Forum: Technical Forum Gets Tech Support Advice

All the better to deliver more charts, including Yahoo, 3Com and Qwest.

http://www.thestreet.com/comment/techforum/762949.html

TSC

Options Forum: FAQ Preview: Some Basic Questions on Options

We tackle the VIX and point you to books and Web sites that will explain options and futures trading.

http://www.thestreet.com/stocks/optionsforum/763073.html

TSC

Tax Forum: Reconstructing What You Paid for Your Mutual Fund Shares

Also, converting a vacation home to a primary residence and sorting out who owes inheritance taxes.

http://www.thestreet.com/funds/taxforum/763212.html

The Daily Question: Do Any Mutual Funds Short Stocks?

Also, undiscovered small-cap funds and alternatives to the exclusive DFA funds.

http://www.thestreet.com/funds/question/763016.html

Editor's Letter: The Coming Week on

TSC

By

Dave Kansas

Editor-in-Chief

You have come to know us on the Web. Now you get a chance to see some of your favorite

TSC

writers and commentators on TV.

This coming weekend, we launch "TheStreet.com" on the

Fox News Channel

-- a half-hour of uncensored opinions and actionable insights you need to make good decisions in today's frenetic market.

Brenda Buttner

will host the show each week, and special guests will include the kinetic

James Cramer

and columnists

Herb Greenberg

,

Adam Lashinsky

and

Gary B. Smith

. They might even let me on this show! Each week

TSC

will banter with top money managers, CEOs in the news and other guests. Also, other

TSC

writers will make appearances on the show.

Catch the show every Saturday at 10 a.m. EDT and again Sunday at 1 p.m. EDT on the

Fox News Channel

. And if you don't have the

Fox News Channel

, demand that your cable company pick it up!

For more details about the show and for information about where to find the

Fox News Channel

in your area, see the "TSC on FOX"

page, available from the left-hand NAV bar on the

home page.

On the site, we're preparing to deliver on something James Cramer and an army of readers have been

howling about: the Truth. Like Fox Mulder, we know the Truth is out there, and we're going to do our best to help you find it. Starting this week,

TSC's

newest column, Truth Serum, will make its debut. We'll be chasing down those nasty market rumors and trying to determine whether they're on the money or just the wishful thinking of stock touts and charlatans. And we're not stopping with one-shot deals, either. We'll be tracking the most important rumor mills and keeping track of who provides the most accurate information.

Also, for the offbeat,

TSC

seeks to deliver.

Marc Young

, our German correspondent, will visit Berlin's

Love Parade

, the world's largest rave. Once a counterculture icon, the big techno fest is now a corporate promotion vehicle. Companies like

Deutsche Telekom

(DT) - Get Report

and

Coca-Cola

(KO) - Get Report

vie to sell products and services while the dancing masses throng through the streets of Berlin. Should be an interesting read.

Finally, if you have any concerns or comments, please feel free to email me at

dkansas@thestreet.com. I'll see that your issues get dealt with promptly.

Don't forget to watch that television show!

L'Etoile du Nord

Dave Kansas

Editor-in-Chief

Market Update: Weekend Report: Market Awaits Positive Earnings Reports, but Negative News Hits GM, eBay

By

Justin Lahart

Senior Writer

Yep, this is the week we begin to find out how good the second-quarter earnings season is really going to be. So good that, even though they rallied in expectation of good numbers, stocks can go higher still? So good that investors can put aside any nervousness about what

Alan Greenspan

and the other merry pranksters on the

Federal Open Market Committee

are thinking of doing next?

With very little revision activity last week, industry analyst expectations are for

S&P 500

earnings to grow by 11.2% year over year, according to

First Call

director

Chuck Hill

. Because estimates are usually on the low side, "it still looks like the final results will be close to 15%," Hill wrote in a report late Friday.

Monday being a Monday, not too many big-time names are scheduled to report.

Pfizer

(PFE) - Get Report

, the company that bears responsibility for all those

Viagra

jokes, reports. So does

Amgen

(AMGN) - Get Report

. And

Gannett

(GCI) - Get Report

will lead off for the buggy-whip, er, newspaper companies. People will be watching that one closely to see if the group can put on a repeat of the white-hot first quarter.

Though many CEOs are likely already beaming in anticipation of putting up good numbers, all is not well in U.S. Companyland.

General Motors

(GM) - Get Report

will have to deal Monday with investors' reaction to Friday's after-the-close news that a California jury ordered it to pay $4.9 billion to six people severely burned when the fuel-tank of their Chevy Malibu exploded after getting rear-ended.

Once you see

The Wall Street Journal

do a negative Heard on the Street on a company, you might think that all the bad news might have been wrung out of its stock. But maybe that won't be the case for

eBay

(EBAY) - Get Report

. The online auctioneer, focus of a Thursday Heard suggesting that it won't post a second-quarter profit, got hit with yet another outage Saturday.

On the sunnier side, semiconductor equipment makers are set to begin their annual trade show Monday, and it's likely to be a far cheerier meeting than last year's fete, when a global downturn was hurting producers badly.

Reuters

reports that the

SEMI

, the industry's trade group, plans to release a survey of member companies forecasting a 9% gain in revenues in 1999.

In the papers...

Maybe someday, some U.K. company will do a deal without it getting leaked to London's Sunday papers. And maybe someday the

Red Sox

will play the

Cubs

in the World Series. So with the usual caveat that these things out of London don't always go down like they're written, here goes.

The Sunday Times

reported that

Vodafone Airtouch

(VOD) - Get Report

is looking to link up with Germany's

Mannesmann

, with the aim of eventually buying the company and creating a global mobile-telecommunication giant that would, at current levels, bear the largest market capitalization of any European company.

The Observer

reported in its Sunday edition that

Cable & Wireless'

(CWP)

cable television arm,

Cable & Wireless Communications

, will acquire the U.K.'s second-largest cable operator,

NTL

(NTLI)

. "The move will stun the City and the companies' rivals in the media and telecommunications world," gushed

The Observer

. "C&WC had been widely expected to merge first with the country's third major player,

Telewest

(TWSTY)

."

The Observer

went on to say (somewhat breathlessly) that the deal might force Telewest to the table, and that a three-way merger may result.

A number of London papers reported that

Tomkins

(TKS)

will announce plans Monday to demerge (British for spin off) its food arm,

Rank Hovis McDougall

.

The Sunday Telegraph

reported that

DaimlerChrysler

(DCX)

will pay $465 million for a 40% stake in

Tag McLaren Group

, one of the world's top makers of Formula One racing cars.

Meanwhile,

The Sunday Times

reported that Formula One has been linked to cocaine smuggling -- the cars are allegedly used to conceal and transport the drug around the world.

The Coming Week: Fully Invested Bears Quake Before an Exuberant Earnings Slate

By

Justin Lahart

Senior Writer

People already know a lot about the earnings season that's going to begin in the coming week. They know that analyst forecasts are for the

S&P 500

to grow by more than 11%. They know that company analysts low-ball estimates by about 2.5%. They know that earnings will come in above the forecast. They know that the preannouncement season lacked the big-name blow-ups that the market's seen over the last year, and that suggests companies could beat estimates by more-than-the-usual margin. And they know that when companies get on that conference call and talk about what business looks like going out, they'll probably have good things to say -- expectations are that the third quarter will be even better than the second.

In short, this is going to be one terrific earnings season.

But what people don't know is how much of that is already in the market. Even in May, there was talk about how as soon as the

Federal Open Market Committee

meeting was done, attention would turn to earnings and the summer rally would commence. And sure enough, since the FOMC finished its meeting, the

S&P 500

has gone up more than 5% -- even as bond yields stayed high and people who still secretly read

Graham & Dodd

tore their hair out over valuations. And so again there are people worrying about how the market is priced for perfection and how this earnings season, stock may sell off on the fact. Even as they hold onto their stock for fear of missing a rally.

The stock market story of the late 1990s: Everybody's a fully invested bear.

"It seems to me like this thing, whether you agree with it or disagree with it, it still wants to go up," said Ned Collins, vice president of U.S. stocks at

Daiwa Securities America

. "We've all been looking for a summer rally, and maybe we've already had it, but you sure don't want to go short."

No, when CEOs and CFOs high-five each other to a chorus of "Congratulations on a terrific quarter" from the analyst community, short doesn't sound like the safest thing to be.

On the economic front, there are a couple of big reports set for release that, so long as they come in as well as expected, shouldn't do anything to drown out the big sucking, er, cheering sound from all those analysts. The two key June inflation reports, the

Producer Price Index

and the

Consumer Price Index

come out Wednesday and Thursday, respectively.

But though he thinks the headline numbers should be benign,

Morgan Stanley Dean Witter

chief U.S. economist Richard Berner worries that signs of nascent inflation may begin to show up in the PPI and CPI. "What's important to watch these days -- particularly in the Producer Price Index -- is whether or not the indexes at earlier stages of the pipeline confirm the increase in prices we're seeing in the

Purchasing Managers'

price diffusion index and other inflation measures. My bet is that it will start to do that."

Berner does not think that things are about to get downright inflationary, but rather that as a result of the rebound in global growth, inflation will return to a run rate of 2% to 3%. "That's not bad, but it's higher than what's built into the marketplace," he said. Berner expects the

Fed

to take back all of the cuts it made last year.

Whether the Fed really is going to raise rates again is a subject of great debate. So far, the market is acting as if it will not. That will likely remain the case until the

Alan Greenspan

gives his

Humphrey-Hawkins

testimony before

Congress

July 22. A long way off as far as the stock market's concerned. Let the earnings party begin.

Date

Company

Quarter

First Call View

Yr-Ago EPS

No. of Analysts

July 12

Gannett Company

2

0.86

0.78

13

July 12

Pfizer

2

0.17

0.15

24

July 12

Synovus Financial

2

0.19

0.17

7

July 12

Grainger (W.W.)

2

0.63

0.60

11

July 13

Associates First Capital

2

0.49

0.42

22

July 13

AmSouth Bancorporation

2

0.40

0.36

15

July 13

BB&T

2

0.48

0.43

21

July 13

Dow Jones

2

0.61

0.56

11

July 13

Enron

2

0.50

0.42

17

July 13

Fannie Mae

2

0.91

0.80

19

July 13

Firstar (Post Mercantile)

2

0.30

0.22

4

July 13

Intel

2

0.53

0.33

31

July 13

International Paper

2

0.23

0.29

14

July 13

Merrill Lynch

2

1.46

1.31

12

July 13

Motorola

2

0.41

0.01

28

July 13

MGIC Investment Corp

2

0.93

0.81

11

July 13

Phelps Dodge

2

NA

0.69

9

July 13

Paine Webber Group

2

0.94

0.82

11

July 13

SLM Holding

2

0.82

0.84

7

July 13

Suntrust Banks

2

0.96

0.88

21

July 13

Willamette Industries

2

0.46

0.21

12

July 13

MBNA

2

0.26

0.21

20

July 14

Apple Computer

3

0.64

0.50

19

July 14

Advanced Micro Devices

2

(1.26)

(0.45)

17

July 14

Bestfoods

2

0.61

0.58

14

July 14

Columbia Energy Group

2

0.25

0.27

10

July 14

Ford Motor

2

1.95

1.91

15

July 14

Fleet Financial Group

2

0.73

0.65

21

July 14

Huntington Bancshares

2

0.48

0.43

13

July 14

Polaroid

2

0.33

0.03

9

July 14

Rowan Companies

2

(0.05)

0.50

21

July 14

Southtrust

2

0.63

0.55

16

July 14

State Street Corporation

2

0.75

0.66

14

July 14

Time Warner

2

0.06

0.02

13

July 14

U.S. Bancorp

2

0.54

0.48

21

July 14

Wachovia

2

1.22

1.09

23

July 14

Whirlpool

2

1.24

1.05

9

July 14

Weyerhaeuser

2

0.70

0.34

15

July 15

Alcan Aluminium

2

0.25

0.44

15

July 15

AlliedSignal

2

0.70

0.61

14

July 15

Andrew

3

0.16

0.28

9

July 15

Boeing Company

2

0.48

0.26

13

July 15

Boise Cascade

2

0.44

(0.04)

11

July 15

BankBoston

2

0.77

0.80

19

July 15

Ceridian

2

0.24

0.21

10

July 15

Champion International

2

0.25

0.26

12

July 15

Comerica

2

1.02

0.92

18

July 15

Capital One Financial

2

0.41

0.32

19

July 15

Cummins Engine Company

2

1.21

1.38

8

July 15

Deluxe

2

0.60

0.52

3

July 15

Dover

2

0.40

0.38

10

July 15

Fifth Third Bancorp

2

0.58

0.50

15

July 15

FPL Group

2

1.04

1.02

11

July 15

Freddie Mac

2

0.71

0.56

18

July 15

Gillette

2

0.26

0.33

14

July 15

Guidant Corporation

2

0.33

0.32

32

July 15

Hasbro

2

0.10

0.03

7

July 15

Johnson Controls

3

1.17

0.90

8

July 15

Keycorp

2

0.59

0.56

21

July 15

Coca Cola

2

0.38

0.47

16

July 15

McGraw-Hill

2

0.44

0.39

10

July 15

Maytag

2

0.97

0.71

9

July 15

National City

2

1.11

0.99

20

July 15

NEXTEL Communications

2

(1.35)

(1.45)

17

July 15

New York Times Company

2

0.45

0.40

13

July 15

Office Depot

2

0.21

0.17

19

July 15

Owens Corning

2

1.29

1.02

10

July 15

PPG Industries

2

0.97

1.16

10

July 15

Raychem

4

0.38

0.46

5

July 15

Seagate

4

0.36

0.11

11

July 15

Summit Bancorp

2

0.70

0.66

15

July 15

Unisys

2

0.33

0.24

11

July 15

Union Planters

2

0.71

0.90

12

July 16

Archer Daniels Midland

4

0.06

0.10

5

July 16

Caterpillar

2

0.81

1.20

19

July 16

Constellation Energy

2

0.37

0.39

8

July 16

Dominion Resources

2

0.61

0.61

12

July 16

Edison International

2

0.41

0.40

6

July 16

Potlatch

2

0.30

0.35

3

July 16

Tribune

2

0.87

0.75

14

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