July 26, 1999


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Market Data as of Close, 7/23/99:

o Dow Jones Industrial Average: 10,910.96 down 58.26, -0.53%

o Nasdaq Composite Index: 2,692.40 up 7.96, 0.30%

o S&P 500: 1,356.94 down 4.03, -0.30%

o TSC Internet: 591.85 down 1.90, -0.32%

o Russell 2000: 448.38 down 3.11, -0.69%

o 30-Year Treasury: 89 11/32 down 22/32, yield 6.004%

In Today's Bulletin:

o Editor's Letter: The Coming Week on TSC
o Market Update: Weekend Report: Telecoms Chime In With Big News; U.S. and Vietnam Agree on Commercial Ties
o The Coming Week: Next Week's Data Could Hold Clues About an August Fed Move
o Europe: The Coming Week in Europe: EU to Hold Balkan Reconstruction Talks

Also on

Jim Griffin: The Greenspan Groupie Problem

Everyone watches the Fed chairman like, well, a hawk. But the dollar/yen and dollar/euro markets tell us more.

This Week in IPOs: The Beat Goes On

An IPO market that refuses to slow down makes it seem like deals are just getting shoveled out the door.

Wrong! Take Two: Cramer's Rewrite of His 'Some Companies Answer the Call' Piece

The trader lifts the veil on the important world of conference calls.


Tax Forum: Does a European Daytrader Owe U.S. Taxes?

Also, we cover college savings plans, paper-free bond buying, a tax perk for seniors and more.


Options Forum: How to Buy Right When Writing Buy-Writes

Also, a postmortem on an aborted LEAPS strategy.

The Daily Question: Breaking Away: How Star Managers Fare on Their Own

Also, the case against micro-caps, why short-sale proceeds earn no interest and a defense of TIPS.

Editor's Letter: The Coming Week on



Dave Kansas


On Wall Street, it's all about managing expectations, especially during earnings season. That frenetic time of the year is well upon us, and

has been scrambling to get you all the numbers you need to know. Amid the flurry of reports, make sure to check out our daily coverage in the

markets section, which provides a comprehensive score card of who's meeting, and beating, the Street's estimates.

I hope you've been paying attention to our expanded international coverage. Led by International Editor

Andrew Morse

, our foreign staffers are trotting the globe to bring you the latest in investable ideas and news about overseas trends. Last week

Philip Segal

discussed the bargains created by saber-rattling in

Taiwan, while

Marc Young

looked at corporate Britain's

growing embrace of the euro. This week, look for a feature by the peripatetic

Philip Droege

on Malaysia's project to create the Cyberjaya smart city. As we build out our

international section, we're looking for your input. You can email Andrew at with your thoughts.

We've got a special series this week. Fund mergers happen every day, and we note them occasionally in stories. But as these mergers grew in numbers, we decided they were worth a closer look.

When Funds Collide

is a four-part series, beginning Monday, examining whether mergers are really the benign events that fund companies portray them to be. Staff reporter

Joe Bousquin

finds that they're not. In fact, if you own a fund that is absorbing another, its performance will more than likely suffer in the future, according to Joe's story. And


tax reporter

Tracy Byrnes

adds that you could wind up paying extra taxes as well.

In other news, we've been paying close attention to IPOs in recent months as the IPO cycle continues to provide some spectacular debuts. One of the most promising, according to columnist

Jim Seymour

, will be the offering of

Red Hat

(RHAT:Nasdaq), a tiny software house with a handle on a very big idea -- Linux. In just a few years, Linux has come to dominate its niche by providing network server software, at the expense of no less an outfit than Microsoft. It makes for a fascinating tale, and Jim tells all in two installments beginning Monday.

Beyond the news, we've got a closely fought contest happening on the site: Investment Challenge

. Each week we profile the leaders, so you can read about which strategies are leading the pack. If you've missed it, it's not too late to register! Registration is open through Aug. 9, and you can play through Aug. 20. Visit the Investment Challenge, located on the

Community page, for details.

Finally, I hope you were able to catch the debut of our TV show, "," on the

Fox News Channel

this weekend. We're just getting started in providing you the most energetic, on-target financial news show around. If you have ideas about what you'd like to see, check out the

TSC on Fox page on the site and email us using the form on the right side of the page. As always, we appreciate your feedback.

L'Etoile du Nord,

Dave Kansas


Market Update: Weekend Report: Telecoms Chime In With Big News; U.S. and Vietnam Agree on Commercial Ties


John J. Edwards III

Markets Editor

There's some pretty big news jingle-jangling out of the phone sector this weekend, but none major enough to shake Wall Streeters out of their focus on Thursday's

Employment Cost Index

report and the continuation of

earnings season.

U.K. papers are reporting that

Cable & Wireless


may soon sell its


wireless phone business.

The Financial Mail on Sunday

said One2One, co-owned with



of the U.S., could fetch as much as 11 billion pounds, or $17.4 billion, in a sale to Germany's

Deutsche Telekom

(DT) - Get Report




The Sunday Times

of London separately reports that Cable & Wireless is on the verge of buying back its business phone operations, formerly called


, from 53%-owned

Cable & Wireless Communications


for about 7 billion pounds, or $11 billion.

Elsewhere in telecom, or telecoms, as our British Empire friends say, the Australian government said a further 16.6% of



, the huge, mostly government-controlled Aussie phone company, will hit the public market in October. The flotation of up to 2.132 billion shares is expected to raise about A$16 billion, or US$10 billion. The government, which sold 33% of Telstra in 1997, will hold about 51% after this latest offering.

The U.K.'s

Sunday Telegraph

reports that

Shire Pharmaceuticals


is close to a stock-based merger of equals with

Roberts Pharmaceuticals


of the U.S. The resulting company would be worth about $1.5 billion.

In big global trade news, the U.S. and Vietnam inked an agreement in principle that moves the former combatants closer to full commercial ties. The pact came after a marathon negotiation that included a 17-hour session on Saturday, which left U.S. Trade Representative

Charlene Barshefsky's

stomach knotted from an ill-advised




combo ... sorry, that was me in college.

Elsewhere in the Eastern Hemisphere,

Sara Lee


has made the sad, momentous decision to withdraw the Wonderbra from sale in Shanghai, according to the

Shanghai News

. The bra enjoyed initial success upon its limited introduction to Shanghai in 1997, but sales were disappointing after department-store counters opened. "The Wonderbra has overestimated Chinese consumers' purchasing power," said the


. Further details on the bra's cognitive abilities were unavailable at virtual-press time.

In the Papers


fronts a piece on "How to Revive


(DIS) - Get Report

." The story points out the Mouse House's multiple disorders, such as weak retail sales, weak


ratings and a weak hold on the attention of young fans bombarded by cooler entertainment alternatives (the last being the subject of an April


series). But it goes on to say Disney's parts are so appealing, despite recent struggles, that the sum of them will likely see its value rise in due course.


Alan Abelson

(this just in: He's bearish) talks with Tom Petrie of oil-and-gas investment shop

Petrie Parkman

, who likes


(APA) - Get Report


Forest Oil



HS Resources



Ocean Energy



The paper also includes a positive feature on


(ALL) - Get Report

and a look at the competitive threat that electronic communications networks pose to the big stock exchanges.

The big business feature in Sunday's

New York Times

is on


(SNE) - Get Report

new Metreon "urban entertainment destination" (or mall, for those of you not in the PR business) in San Francisco. The mall-like whozamawhatzit, featuring shops, interactive games and movie theaters, is seen as part of the next wave in retail and entertainment, but its estimated $225 million cost has observers reserving judgment for now.



also takes a long look at the convoluted battle between

Qwest Communications



Global Crossing


for control of


(FRO) - Get Report


U S West


, focusing on Qwest CEO Joseph Nacchio. You may know the contretemps ended with Qwest agreeing to buy U S West and Global Crossing winning Frontier, but in this story you'll find out who called and emailed whom when and how often; what Nacchio's family gave him for his birthday; and much, much, much more.

The Coming Week: Next Week's Data Could Hold Clues About an August Fed Move


Justin Lahart

Senior Writer

There is nothing quite so frustrating as when Wall Street seems bent on fulfilling prophecies. And damned if that isn't what it feels like these days.

Sure, it was nice on the way up, when stocks rallied up on the heels of the June

Federal Open Market Committee

meeting, breaking out of the range that had held them for three months. Just like the script said:


hikes; with rate worries taken care of, people turn to earnings, which will be good; market hits new highs.

The problem is that there was always a second part to the script, that the market would do that too-far-too-fast thing it's done the last couple of Julys, and that some kind of correction would follow. Everybody and his uncle knew that you were supposed to pile into the market on the Fed announcement, and everybody and his uncle knew that you were supposed to pile out of the market before

Alan Greenspan

gave his



And so here we are, wondering if things will keep on following the script, if the market will have yet another big October selloff, at which point it will be time to get back in.

For Stanley Nabi, chief investment officer at

DLJ Investment Management

, the idea that stocks will sell off like they did in 1997 and 1998 is a bit excessive, but he will readily admit that they have further to fall. His reason is twofold. First, with the bulk of earnings out of the way, a positive has been removed from the market -- there will be no more bidding up stocks on hopes that next week's report will come in big. Second, on the back of Fed chairman Greenspan's testimony, the rate outlook has become much less favorable. Whereas a week ago people were saying that it was likely the Fed would not act at its Aug. 24 meeting, now they are much less sure.

"It's not a bear market or the beginning of a bear market," said Nabi. "I think the total magnitude of the correction will be in the 8% to 10% range -- no more than that. If the market goes down 10%, that would be enough of a correction to open up new purchases." Following that, said Nabi, "I think we'll make a new high by the end of the year."

The speed with which that happens will be highly dependent on what the Fed does. As far as Nabi is concerned, "The worst thing the Fed can do is not hike in August. If they don't get it out of the way, the questions will linger" and stocks could remain under pressure until the Federal Open Market Committee meets again in October.

The sense the Fed watchers got from Greenspan's testimony is that whether the FOMC does hike in August will be highly dependent on the economic data that come out between now and then.

"Greenspan made it pretty clear he wants to tighten," said David Ging, Treasury market strategist at

Donaldson Lufkin & Jenrette

. "He's just looking for an excuse. The market is going to be watching the data intently as it comes out for any sign that inflation is increasing or that the job market remains tight."

The economic focus in the coming week will be the second-quarter

Employment Cost Index

and, to a lesser degree,

gross domestic product

. Both reports "should be okay for the market" said Bill Dudley, director of U.S. economic research at

Goldman Sachs

, but it is unlikely that the bonds will be able to make significant gains, since investors will be so worried about the next week's data.

"The market is going to have a little bit of trouble, because people are going to be very fearful of the data," said Dudley. "If the market rallies, it's not going to be a big rally."

Europe: The Coming Week in Europe: EU to Hold Balkan Reconstruction Talks


Marc Young

German Correspondent

Pay for it now. Or you'll fork out twice as much later on.

Without doubt, that's what some of the

European Union's

leaders will be thinking next Friday when they meet in Sarajevo to discuss investment and reconstruction in the Balkans following the Kosovo War.

The U.S. has already indicated that because it paid for the brunt of the Kosovo bombing campaign, the Europeans will have to shoulder responsibility for rebuilding and implementing a stability pact for the region.

If the leaders can come up with definitive sums of cash and hash out a significant reconstruction scheme for the Balkans, private investors are sure to follow closely behind. And while war-pounded Kosovo and its immediate neighbors, like Macedonia and Albania, will get a big chunk of the money, countries which are likely to serve as conduits for investment and reconstruction, such as Greece, Hungary and Bulgaria, also stand to benefit.

EU finance ministers have been cagey about naming figures, however, as most of them are engaged in cutting budgets and reigning in spending at home in order to meet their fiscal requirements for the euro.

The first clues the meeting will result in something substantive could come out of preparatory talks in Brussels on Wednesday.

World Bank

officials, as well as representatives of other international bodies, will participate in those talks.

EU leaders, however, probably realize that the best way to keep the region from becoming a problem in the future is to make its inhabitants as fat and happy as everyone else in Western Europe is today. Greece remains their prime example. While the cradle of democracy may still seem a bit of a backwater compared to the rest of the EU, its membership and support from the West has helped cement the country as a shining example of market-oriented democracy when compared to its neighbors.

The Earnings Autobahn

Next week will also be an earnings jamboree for German carmakers, as


will hold a press conference for first-half results on either Monday or Tuesday and


will follow suit on Wednesday. The party will continue in New York on Thursday when



will release its first-half earnings. The euro's recent weakness against the dollar is expected to help boost the Stuttgart-based auto giant's results.

On the economic front, the

European Central Bank's Governing Council

will meet on Thursday to discuss monetary policy for the eurozone. The meeting will be the last before the ECB breaks its summer recess and should be a bit of a snoozer; no press conference has been scheduled.

Central banker reverie could be interrupted, however, when figures for June euro area M3 money supply growth. The figures are to be released during the coming week, although no time has been set.

Strong credit growth has fuelled money supply growth of late, but "large net outflows from nonbanks have tempered (the) M3 rise," says Nigel Anderson, an economist for

Greenwich NatWest

in London. However, the "ECB has signaled that it will be watching credit trends closely."

While the ECB is dissecting the intricacies of eurozone private credit growth, much of the Balkans will simultaneously be hoping the EU will expand their credit, as well. on TV! Each weekend, catch on Fox News Channel for a half hour of the same unique financial journalism and commentary you've come to expect from TSC on the Web. Saturdays at 10 a.m. ET and Sundays at 1:00 p.m. ET.

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