TheStreet.com's DAILY BULLETIN
September 7, 1999
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Market Data as of Close, 9/3/99:
o Dow Jones Industrial Average: 11,078.45 up 235.24, 2.17%
o Nasdaq Composite Index: 2,843.11 up 108.87, 3.98%
o S&P 500: 1,357.24 up 38.13, 2.89%
o TSC Internet: 595.82 up 33.91, 6.03%
o Russell 2000: 435.97 up 8.55, 2.00%
o 30-Year Treasury: 101 14/32 up 1 16/32, yield 6.021%
In Today's Bulletin:
o Editor's Letter: While the Weather Turns Cooler, Wall Street Heats Up
o Market Update: Weekend Report: Wind of Market Gains in Europe Blows Past the Barbecue
o The Coming Week: Market Will Savor Its Rally, but International Data Loom
o Europe: The Coming Week in Europe: ECB Press Conference May Highlight Bank's Rate Bias
Also on TheStreet.com:
Wrong! Rear Echelon Revelations: Why the Dot-Coms Cannot Live on Ads Alone
Tempted to invest in Web sites with one revenue stream: advertising? Short 'em, Cramer says.
This Week in IPOs: Enough of the One Hand Clapping Sound, Already!
OK -- I asked for a break from the manic summer IPO market -- but this is ridiculous!
Europe: At Berlin Symposium, Start-Ups Seek Ways to Capitalize on the Net
Last week's BerlinBeta symposium allowed tech-savvy designers to mingle with venture capitalists, looking for a mutually profitable relationship.
Asia/Pacific: The Coming Week in Asia: The Japanese Stock Market Sings a New Tune
Just exactly what tune is still up for discussion.
Technical Forum: TA of the Red Hot Index: Take 2
A look at the second set of six stocks from Cramer's index.
Jim Griffin: Look Out, Here Comes Tomorrow
Friday's report offered a reprieve. But a long-term view shows it's premature to assume the Fed won't tighten again.
View From the North: Picture This: U.S. Filmmaker Migration North Sparks Anti-Canada Sentiment
Drawn by lower costs, U.S. filmmakers are taking their greenbacks north. In response, Hollywood unions are pressing Washington to punish U.S. production companies.
You Said It: A
Weekly Poll: After the Rally, What's Next for Wall Street?
Nothing but Claritin-commercial blue skies, or is it not nice to fool Mother Nature? Tell us what'll happen in this week's trading.
Editor's Letter: While the Weather Turns Cooler, Wall Street Heats Up
9/6/99 12:56 PM ET
Oh, August can be sluggish, can't it? Hard to tell given the last two days of last week. Hoo-hah, as
James J. Cramer
, our daily columnist likes to say. Down the chute Thursday, right back up it on Friday, and the market is just rolling into the hot-and-heavy days of early September.
Yup, back from the beach, back from the cabins, back from all those places where traders and investors hide during the scorching month of August. The desks will be full, and we'll be ready to roll right from Tuesday morning's bell, giving you the latest dope from the stock market and the latest ideas from a stable of the strongest columnists in financial journalism.
For starters, Tech Savvy columnist
checks in with a three-part series on
and its challenges for the future. How will the company handle broadband access, its anti-Net origins,
and declining fees? Though it's merely a child next to
, AOL has become in its short life span the closest thing the Net has to an American institution -- and now that institution is at the crossroads. This series starts on Tuesday and will run through Thursday, only on
As many IPO watchers noticed, August felt like the Gobi Desert. But things are going to change fast, and our IPO columnist,
, is busy mining his database of deals to bring you timely information this week on the IPO market. Check out Ben's "
fever meter," which tracks which investment houses have produced the best first-day returns for investors in new offerings. For this special column, Ben has opened up his database to
readers to give them a full rundown of league stats for the past two months. It's a must-read for investors gearing up to face a new barrage of IPOs.
And what would a week be without the ever-busy James J. Cramer? The trader will offer up not one, but two chats on Thursday. Sure, he sometimes has some cross words for our dead-tree cousins, but he's not afraid to wade into a chat at
. He'll be there on Thursday beginning at 1 p.m. EDT, taking on questioners while in the heat of the action. After the close, Cramer will crack his knuckles and participate in a
Chat at 5 p.m. It's free, but registration is required at
We're excited to have the gang back from the shore, and it promises to be a rollicking week. We'll be ready to cover every base. And if you have a question, comment or concern, don't hesitate to email me at
L'Etoile du Nord
Market Update: Weekend Report: Wind of Market Gains in Europe Blows Past the Barbecue
9/6/99 7:18 PM ET
Memories can be hazy after three long days of glaring sun, charred burgers and empty beer cans. Before all that, way back on
Dow Jones Industrial Average
partied into the weekend and finished up 235.24, or 2.2%, at 11,078.45. On Labor Day, European markets kept that vibe alive while most Americans took the day off.
Major European markets were up, with the only notable exception clad in a beret with a skinny cigarette pinched between its finger and thumb. In keeping with military history, the French were last seen retreating. The
was off 4.33 to 4668.04.
The United Kingdom's
index shimmied up 43.60 to 6375.70 while Germany's
boogied up 64.33 to 5400.55. Yet, the biggest winner in the European party scene was Greece's
index, which took home a bevy of beauties and soared 213.82 to 5621.67.
was up 34.99 to 3933.22.
Much of the FTSE's move was due to
, a Brit telecom, which admitted it has been privately canoodling with
. The pair has been romantically linked for months, with most speculating that they would merge and form a nationwide U.S. mobile network. Vodafone was up 2.2% on the FTSE on news of the footsie.
In other London news, Britain's third-best bank,
, announced the purchase of the country's fourth-best insurer,
Legal & General
, for $17.25 billion. No one seems to know just how good the resulting company would be, but both stocks were trading down.
announced that it will buy
Wendeln Brot und Backwaren GmbH
for $1.1 billion, creating the largest European baker. Kamps said the move would triple its annual sales and quadruple operating profit. Meanwhile, Americans tried to unscramble "Wendeln Brot und Backwaren GmbH."
Way out east, the sun was rising. The
index was up 126.52 to 17756.51, while the
was up 206.85 to 13385.16.
Back in America,
kept a Labor Day tradition alive. It went shopping and picked up
International Telecommunications Data Systems
in a $182 million stock swap.
In the Papers
While world news is too eventful, with car bombs testing the Israeli-Palestinian peace process and news from East Timor growing more horrible, in the financial sector it is, as they say, sleepy.
The New York Times
lords over economic data, numerical mashing and the intricacies of the market vagaries, leading with hard-core Street news, sexy rumors and whispers from vacationing gurus.
Oh wait, that's us.
has a story about fugitive money manager
, who was caught in an uber-expensive German hotel after a four-month international search. Frankel, suspected by the
of embezzling more than $200 million, had been staying in Room 5 for eight weeks before the authorities finally tracked him down on tips from cranky associates and a trail of credit card charges. The jury is still out on who was more inept: Frankel for his discreet choice of sanctuary or the FBI for not finding him sooner.
Other gritty articles from Monday include a hard-hitting behind-the-scenes expose of
efforts to televise golf, new corporate attempts to downsize obese employees and a report on the circulation status of soft-core beer-porn magazines like
The Washington Post
discussed the golden years, sort of.
looked at the phenomenon of post-retirement seniors getting jobs at vacation spots while
examined the idea of boomers thumbing their noses at the retirement age, begging the question: After the SUV, what?
The Coming Week: Market Will Savor Its Rally, but International Data Loom
9/3/99 7:03 PM ET
Friday's big rally, inspired by that weak August
, what's the market going to do for an encore? Well yeah, it'll take Monday off to eat lobster and get hammered at the beach, but after that?
Friday's action was just the latest feat for the amazing, death-defying U.S. stock market. Just as it looked like major indices were racing to complete one of those oh-so-scary head-and-shoulders patterns, just as evidence was mounting that the
Federal Open Market Committee
would again be hiking rates at its Oct. 5 meeting, just as all those worries about capital fleeing the U.S. seemed like they'd come true, in slipped the jobs report. Sometimes it almost seems like the market's rigged.
Let's consider this year compared with last year. On Sept. 3, 1998, the
finished at 982 -- it closed 38% higher on Friday. The 30-year Treasury yield is 80 basis points, or 15%, higher. Even with some pretty amazing earnings in the third quarter -- it looks like they'll gain better than 20%, year over year -- things are way more highly valued than they were then. And even back then one could have argued things were rather stretched.
'Why Can't We Break This Thing?'
"Why, if it is manifestly overvalued, can't we break this thing?" asked Howard Simons, quantitative strategist at
. "I think people have just gotten tired of being wrong and they've just said the hell with it." Too many times it has been a mistake to have gone short. It has been a mistake to have gone into cash. It has been a mistake to be bearish.
"Fundamentally, I do not like the market," said Simons. "Technically, I think the risk of a break is high. The market doesn't belong higher, but don't be surprised if we run up again."
Simons' sense is that if the market gets the idea that the
is on hold from here on out, and that its talk of the danger of high equity prices is more bark than bite, stocks could be in for a rocket ride. He notes that the recent period of uncertainty is similar to what the market went through in the spring and, as was the case then, there's been a lot of call selling. With stocks moving higher, and futures and options expiring the Friday after next, there could be a race to cover. "The comedians have been selling calls since last month," said Simons. "As we get toward expiration, we could have an unwinding to the upside that could be fierce."
That depends on stocks continuing to post gains, though, and whether
keeps on happening really depends on the Fed. Although in the wake of the August employment news, the market's perception is that the bank is on hold for the rest of the year, that is not necessarily the case, points out
Morgan Stanley Dean Witter
chief money-market economist Bill Sullivan.
"If you pay close attention to the Fed, first, they perceive the current condition in the labor markets as tight, and I don't think that broad interpretation will change in light of the latest data," said Sullivan. "Second, they're still looking at the trajectory of consumption and the interplay of consumption and equity wealth."
Look Overseas for the Big Numbers
There is little in the way of U.S. economic data to hinder the perception of the Fed staying pat in the coming week. The only really major report to come out, the August
Producer Price Index
, is not expected to offer much fodder to the tightening argument. There will be, however, a bevy of Fed officials giving speeches, and
Big Al Greenspan
himself will take to the stage on Wednesday.
Yet the most important economic news will likely come from overseas. Germany reports its July
data Wednesday, and it is widely expected to be the first of a series of reports that will show a flourishing European economy. That's important in these days when
people are talking about a rebalancing of world economic growth, and a subsequent movement of funds away from U.S. shores.
Even more weighty: Japan's
gross domestic product
figures for the April-June period.
Expectations are that that number will come in flat. If it comes in strong, it could pose problems for the U.S. markets. Japan's previous GDP release hurt the bond market badly -- its unexpected strength took away the argument that rates would stay on hold because the world economy was at risk. This GDP report will be more of a currency story -- everybody knows, after all, the world economy's on the rebound. If the bond market moves on it, it'll be because the dollar has.
Europe: The Coming Week in Europe: ECB Press Conference May Highlight Bank's Rate Bias
9/4/99 12:25 AM ET
The wait for higher interest rates in Europe starts now.
Even though nobody expects the
European Central Bank
to change rates at its meeting next week, everyone will be hanging on President
, who will offer his two (euro) cents on monetary policy for the first time since mid-July. Back then, Duisenberg put a mild spook into about-to-be-vacationing traders by noting a tightening bias was "creeping" into the ECB's considerations.
Sure, Duisenberg's words weren't beaten into the planet's collective consciousness as deeply as
quip, but it was arguably his most powerful sound bite since 11 countries dropped their marks, escudos and francs in favor of a common currency this past January.
His cleverly timed comment propped up a flagging euro, which was flirting dangerously close to parity with the dollar at the time. On Friday, the euro was back at $1.06. Duisenberg gave the new currency just enough breathing room for stronger data to show Europe's economic recovery was taking hold.
The fact that the continent's economy does seem to be rebounding means that during Thursday's press conference, Duisenberg will likely have to answer the question of whether the ECB has now adopted a tightening bias, rather than merely crawling toward one.
Even if the bank does opt for such a bias, many observers don't think a rate hike is imminent.
"Business sentiment is probably still too fragile for the ECB to begin tightening policy this year," says Catherine Lee, an economist for
in London. "As the upturn in growth takes hold,
they'll be able to take back this year's rate cut."
No move this Thursday, perhaps, but the key point remains that euro-area rates are likely to go in only one direction at this point.
The coming week will also present data that are sure to be scrutinized by the ECB and the market alike. On Wednesday morning, German
for July will provide insight into Europe's largest economy, although the central bankers will have to wait until Friday to check out Spain's IP for the month.
Figures for second-quarter
gross domestic product
for France and Germany will be released on Tuesday and Thursday, respectively. Both reports are likely to show the low point of growth for the year in the eurozone's top two economies.
In the equity markets, financial issues will likely hold interest for investors amid speculation of further mergers and consolidation in the sector. On Friday, Britain's third largest bank
said it was in discussions to buy life insurance and pensions provider
Legal & General Group
. While in Frankfurt,
chairman announced the bank would create a regional investment bank with its European partners.
The European aerospace industry could also provide some excitement next week, after Germany's leading business daily
reported Friday the German government was actively promoting a merger between
, owned by
, and France's
On the political scene, regional elections on Sunday in Germany could make Chancellor Gerhard Schroeder's chance of passing his financial reform package more difficult if his center-left SPD party fares poorly.
With a slew of local elections spread out over the next six months, stubbornly high unemployment and slumping poll ratings, Schroeder will probably be one of the last people pleased when the ECB does finally pull the trigger.
John J. Edwards III on MarketTalk Tuesday, September 7
Chat with John J. Edwards III on AOL's MarketTalk at 1:30 p.m. EDT. MarketTalk is hosted by Sage Online. (Keyword: PF Live)
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