daily08-29-99

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TheStreet.com's DAILY BULLETIN

August 30, 1999

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Market Data as of Close, 8/27/99:

o Dow Jones Industrial Average: 11,090.17 down 108.28, -0.97%

o Nasdaq Composite Index: 2,758.90 down 15.72, -0.57%

o S&P 500: 1,348.27 down 13.74, -1.01%

o TSC Internet: 573.99 down 2.46, -0.43%

o Russell 2000: 432.45 down 3.57, -0.82%

o 30-Year Treasury: 102 02/32 down 1 03/32, yield 5.961%

Companies in Today's Bulletin:

Boeing (BA:NYSE)

Cyprus Amax Minerals (CYM:NYSE)

Asarco (AR:NYSE)

Phelps Dodge (PD:NYSE)

Wal-Mart (WMT:NYSE)

In Today's Bulletin:

o Editor's Letter: The Coming Week on TSC
o Weekend Report: Boeing Strike Averted; French Retailers Plan Rival for Wal-Mart
o Wrong! Rear Echelon Revelations: The Dot-Com's Salad Days Are Over
o The Coming Week: Fed Watch Far From Over

Also on TheStreet.com:

Wing Tips: Airlines Suffer Labor Pains

Relations with employees are going from bad to worse for US Airways and Northwest. But a breakthrough at Boeing is welcome, if unexpected, news.

http://www.thestreet.com/comment/wingtips/778342.html

Behind the Screen: Behind the Screen: Death-Tax Cut in Japan Gets New Lease on Life

Prime Minister Obuchi wants Japan's parliament to consider slashing Japan's hefty inheritance tax to free up more money for investment.

http://www.thestreet.com/comment/screen/777318.html

Europe: The Coming Week in Europe: Prodi and Other Commissioners Must Prove Themselves

Also, Internet stocks could be of interest after AOL Europe's announcement of free access and steep price cuts.

http://www.thestreet.com/int/euromarkets/778153.html

Asia/Pacific: The Coming Week in Asia: Sunny Mood in Japan, But Daewoo Clouds Korea Outlook

Japanese traders and economists are cheering up as corporations report good news. But some in Korea are questioning the staying power of the Daewoo agreement.

http://www.thestreet.com/int/asia/778073.html

Editor's Letter: The Coming Week on

TSC

By

Dave Kansas

Editor-in-Chief

8/29/99 2:44 PM ET

Any hour, we've got you covered.

That's the beauty of the Net. The dead trees are squirming, trying to figure out this after-hours trading phenomenon, trying to figure out how to get that information into the papers. But with the deadline siren starting to sound in the middle of a few trades of

Microsoft

(MSFT) - Get Report

, it gets a little tricky.

At

TheStreet.com,

our markets team is hustling to give you the latest skinny on the after-hours markets. Sure, volume is a little thin right now, but this is a new, unfolding world that we will watch very carefully. The markets team, led by

John J. Edwards III

and his army of market mavens, will continue to track the post-close markets, enabling you to know the latest about what's happening.

Also, we're tracking the corporate developments of the after-hours game.

Dan Colarusso

and

Caroline Humer

are doing an excellent job keeping you up-to-date on the fast-moving world of ECNs and online brokers. Dan's

scoop of the

Merrill-Knight

deal was worth a bucket of subscriptions for those paying attention. And Caroline's

piece about ECNs holding talks about cooperation was another scoop for those paying attention to the brave new world of trading. Also, for a guide to the Night Life of trading, check out Caroline's updated

story on the subject.

Lots of chatter about after hours, but on Friday the real action will be in the pre-market. The big economic-report kahuna, the jobs data for August, will come out at 8:30 a.m. EDT, and the markets team will be on top of it, publishing the number promptly, followed by the usual incisive analysis. In the days leading up to the report, check out

James Padinha

, our economist, and the bond squad of

Dave Gaffen

and

Beth Roy

. They'll have you well prepped for the economic news.

So get ready for another exciting week on

TheStreet.com

. From the extending hours of trading to the nitty-gritty of the monthly

employment report

, we'll be there. If you have any questions or comments, please feel free to email

me. I'll make sure your issues are dealt with swiftly.

L'Etoile du Nord

Dave Kansas

Editor-in-Chief

Market Update: Weekend Report: Boeing Strike Averted; French Retailers Plan Rival for Wal-Mart

By

David Rheingold

Special to TheStreet.com

8/29/99 7:40 PM ET

An averted strike in the aerospace industry, roiling within the copper industry and more eastward expansion into the eurozone topped this weekend's news.

Boeing

(BA) - Get Report

appears to have staved off a possible strike by machinists. The company and the union reached an agreement on a new three-year contract Saturday. If union members ratify the deal, they would see their pay go up 11% during the next three years, plus they would get a 10% signing bonus. The company also pledged not to lay off employees and replace them with subcontractors. For more on labor issues in the airline industry, see

Holly Hegeman's

recent

piece on the subject.

Copper producers

Cyprus Amax Minerals

(CYM)

and

Asarco

(AR) - Get Report

on Sunday accused rival

Phelps Dodge

(PD) - Get Report

of trying to foil their merger with its threat of a hostile takeover. The two targets say they would consider Phelps Dodge's offer only if it raises the deal to $3.3 billion, up from the $2.5 billion the company is now offering.

The West Coast saw one successful merger this weekend: San Jose-based

SJNB Financial

(SJNB)

will acquire

Saratoga Bancorp

(SRTB)

in a deal valued at $37 million,

Reuters

reports.

A pair of French retailers are planning a merger that would make them the world's second-largest retailer, behind Goliath

Wal-Mart

(WMT) - Get Report

, an industry source told

Reuters

. The companies,

Carrefour

and

Promodes

, are planning to hold a news conference Monday. Wal-Mart has been pushing into Europe in recent years, with the acquisition of two German retail chains since 1997 and the recent

purchase of the U.K.'s

Asda

.

The story of a boy who can see ghosts continued to win over moviegoers for the fourth week in a row, as

The Sixth Sense

topped the box office charts with $20.1 million in revenue. So far the film has grossed an estimated $138.8 million.

In the Papers

You've got Post!

Microsoft

(MSFT) - Get Report

will again offer its

MSN Internet

service in Europe during the next 12 to 18 months, Germany's

Welt am Sonntag

newspaper reports. The company abandoned the service last year in the face of fierce competition from

America Online

(AOL)

.

Meanwhile, media bigwig

Rupert Murdoch

is considering buying

Deutsche Telekom's

(DT) - Get Report

cable television network in Germany, the

Independent

in London reported Sunday. The newspaper said the deal would cost Murdoch's

News Corp.

(NWS) - Get Report

up to 10 billion pounds, or $15.86 billion.

Kellwood

(KWD)

has sold enough women's clothing to become the nation's fifth-largest publicly held apparel maker, but it's having a tougher time pushing its stock on Wall Street lately,

Barron's

reports. Possible factors include the company's 17 acquisitions within the past 15 years and its operational restructuring.

Direct marketer

Acxiom

(ACXM)

, which has built its reputation helping companies single out ideal spenders, is feeling the pinch from spendthrift competitors,

Barron's

reports. Analysts blame the plunge in the company's stock price on pricing pressure.

Four European airlines are eyeing

British Midland

, the second-biggest presence at London's Heathrow airport, the

Sunday Times

in London reports. The paper identifies the suitors as

Lufthansa

,

Virgin

(VIRGY)

,

Air France

and

KLM

(KLM)

.

Barron's

also features an interview with hedge-fund manager

Clifford W. Henry

, who founded New York-based

Worthington Growth

. His stock picks include

VISX

(VISX)

,

The Laser Center

(TLCV)

and

Laser Vision Centers

(LVCI)

, all in the laser eye surgery industry; drillers

Global Marine

(GLM)

,

Diamond Offshore

(DO) - Get Report

and

Grey Wolf

(GW)

;

Celestica

(CLS) - Get Report

,

Colorado Medtech

(CMED)

and

Integral Systems

(ISYS)

in the telephony sector; and private investigation firm

Kroll-O'Gara

(KROG)

, personal records provider

DBT Online

(DBT)

and utilities industry consultant

Navigant Consulting

(NCI) - Get Report

.

British life and pensions mutual

Friends Provident

denied a report in London's

Sunday Times

that

National Westminster Bank

was looking to buy it. The newspaper said NatWest offered to buy Friends Provident for 4.5 billion pounds, or $7.14 billion. But a Friends Provident spokesman told

Reuters

that it had not been approached.

Wrong! Rear Echelon Revelations: The Dot-Com's Salad Days Are Over

By

James J. Cramer

8/29/99 1:32 PM ET

In order for Net companies to become investable again -- instead of just tradeable as they have been since the

DOT

topped out earlier this spring -- we have to have dot-com projects on the drawing board get killed. That can only happen if the venture capitalists get antsy and the entrepreneurs get so nervous that they decide to keep their day jobs.

We got some good news this week on both fronts. First, we saw the unwinding of

Toys R Us

(TOY)

, which had been rumored to be making a

barnesandnoble.com

(BNBN)

type of spinoff of its e-tailer sometime between now and Christmas. These kinds of derivative dot-coms are killer because they raise a lot of money and can destroy whatever else might be out there. The resignation of Toys' Nakasone shows me that these guys are in too much disarray to create something that could hurt an

eToys

(ETYS)

. I am sure the eToys folks are feeling good at the dimming of all TOY prospects.

Secondly, in the business that

TheStreet.com

(TSCM)

resides in, the financial information dot-com sector, we got some long awaited news that shows me that the investable nature of this segment may be coming back. In Beth Piskora's excellent column, "Bull's Eye, in this Sunday's

New York Post

, (a must-read business section available online for nothing) she reports about the demise of a potential competitor to the

FT.com

. It seems some enterprising reporters and editors had planned to start a totally online rival, which would compete for "top-end investors and professionals." The journalists would have gotten equity (this all must sound very familiar to those who helped start

TheStreet.com

).

The

NY Post

report says that

FT

Editor Richard Lambert is breathing easier because of the premature demise of this potential dot-com. But in truth it is guys like me who are breathing the true sigh of relief. As long as every good writer or editor figures that she could go start a dot-com and compete against us with venture capital funding,

TheStreet.com

was threatened. When we started this thing we did not envision going up against a gazillion other people doing what we were doing. We knew we couldn't make it if they did.

As long as the stock market for this segment stayed hot, we were vulnerable to the top people at

CNBC

or

Dow Jones

or the

Financial Times

or

Bloomberg

departing these firms and getting big funding to go against us. But this failure of the anti-

FT

to get off the ground says the window is being nailed shut for people wanting to come into this space. If the once-renegade

FT

people, without a competitor in the U.K., can't swing it, how could the bigger names at the U.S. media outlets get any funding? I don't even think

Lou Dobbs

could get funding if he wanted to switch

Space.com

into a site about business, let alone an important cog at the

Wall Street Journal

or another important business television show. The venture capitalists now know it is too risky and would cost too much to start from scratch, especially when they tried to cash out and the stock market said "NO WAY." They will thumb their noses at any popular biz/fin journalists looking to go up against the big guys.

Did you hear that sigh? That was from me saying, it is about time that bankers and journalists became realistic about how much it would cost now to start a new dot-com from scratch in the media. No one who does it now is ever going to get a free pass again from the rest of the media. Every bit of publicity is going to have to be paid for.

That's too daunting for just about everybody, but particularly for those who have nice safe day jobs and were on the fence whether to take the plunge.

*********

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, Cramer was long TheStreet.com. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

jjcletters@thestreet.com.

The Coming Week: The Coming Week: Fed Watch Far From Over

By

Thomas Lepri

Staff Reporter

8/27/99 7:00 PM ET

Break out the Trapper Keepers. The market is going back to school.

The

Federal Open Market Committee's

decision this week to raise interest rates by 25 basis points and maintain its neutral bias surprised virtually no one. It also did little to quell fears that the year's second rate hike won't be its last. As loathsome as the notion may sound to those tired of this summer's waiting game, the coming week promises to look a lot like the previous ones: The market is back on Fed watch.

We've seen this movie before. On June 30, when interest rates rose 25 basis points, many interpreted a shift in the Fed's policy directive to a neutral from a tightening bias as a signal that the dirty business was past. Then the July employment report came out smoking, and talk shifted from whether the Fed would raise rates at all to whether a 50-basis-point move was in the offing.

The lesson is pretty clear. If next week's data come out too hot, the Fed will tighten further. If not, it won't. Simple as that.

"Who knows whether the Fed's going to raise rates?" moaned Peter Boockvar, equity strategist at

Miller Tabak Hirsch

. "No one's smart enough to know the data."

That may be. But there's a sizable contingent that believes that Y2K liquidity issues will stay Fed chief

Alan Greenspan's

hand. The tension between that camp and those more inclined to follow the economic data will likely define the rough contours of next week's action.

As for the numbers themselves, next week will usher in the first August data, including the

Chicago Purchasing Managers' Index

on Tuesday and the

National Association of Purchasing Managers

index on Wednesday. The week culminates on Friday with last month's bugbear, the employment report.

"All the numbers in between now and next Friday will be talked about in the context of the employment situation, which is so important to Greenspan and such a key driver in the bond market," said Gail Dudack, equity market strategist at

Warburg Dillon Read

.

"If the numbers are benign, the bonds will rally," said Boockvar. That would be good news for the bond-watching stock market. If the long bond yield can stabilize below 6%, Dudack said, stocks should react positively.

Despite the last two days of light-volume selling, the market still seems to be on strong technical footing. "We're just seeing normal profit-taking from the rally earlier this week," said Dick Dickson, technical analyst at

Scott & Stringfellow

. "If we get it cleared up next week, we'll be in a good position going forward."

"Liquidity is clearly positive," Dickson elaborated. "Momentum is clearly positive. Don't step in front of a speeding bus."

The image of that speeding bus (we've all seen that movie, too) will likely get a lot of play next week in the wake of Alan Greenspan's speech today before a

Kansas City Fed

symposium in Jackson Hole, Wyo. Postulating a link between the protracted rise in stock valuations and consumer spending, Greenspan said the Fed's "analytic tools are going to have to increasingly focus on changes in asset values and resulting balance sheet variations."

The notion of the Fed paying closer attention to the stock market, coupled with the market's technical strength, has some worried. It's got Hugh Johnson, chief investment officer at

First Albany

, more than a little spooked by the prospect of another rally in the coming week. "By my math, the market is overvalued," Johnson explained. "And when you move to a rising inflation and interest-rate environment, P/E ratios should come down. It would be healthy if

the Dow would come down to the 10,500 or 11,000 level. Otherwise we run into the risk that the market will be characterized as speculative by the Fed.

"If we stay on a roll, it could invite the Fed to ... I still don't believe it'll do it on speculation alone, but it could be a factor," he said. Still, Johnson isn't bearish by any means: "I wouldn't start raising cash yet."

Neither would Dickson. "I'm bearish by nature," the strategist said. "I'd like to be bearish. I'm worried about valuations, how high this market's gotten. But I can't work up a good bear case now. I guess I'm being dragged kicking and screaming over to the bull camp."

He'll probably find a reluctant Johnson there as well.

John J. Edwards III on AOL's MarketTalk, hosted by Sage

Monday, August 30

Chat with John J. Edwards on AOL's MarketTalk, hosted by Sage at 3:30 p.m. EDT. (Keyword: PF Live)

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