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daily09-22-99's DAILY BULLETIN

September 23, 1999

Market Data as of Close, 9/22/99:

o Dow Jones Industrial Average: 10,524.07 down 74.40, -0.70%

o Nasdaq Composite Index: 2,858.16 up 37.06, 1.31%

o S&P 500: 1,310.51 up 2.93, 0.22%

o TSC Internet: 650.68 up 32.94, 5.33%

o Russell 2000: 427.53 up 1.03, 0.24%

o 30-Year Treasury: 100 15/32 up 2/32, yield 6.088%

Companies in Today's Bulletin:

Altera (ALTR:Nasdaq)

Bed Bath & Beyond (BBBY:Nasdaq)

In Today's Bulletin:

o Market Features: IMF Wants Another Fed Rate Hike, but Is Anyone Listening?
o Wrong! Dispatches from the Front: That Streakless Street
o Evening Update: Bed Bath & Beyond Tops Estimates; Global Crossing to Join S&P 500
o Bond Focus: Treasuries Resist Dollar's Bad Influence

"" on the Fox News Channel

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TheStreet Recommends

Scott Reamer of SG Cowen will cover Internet and new media companies with this week's "Stock Drill" team of Jim Cramer and Herb Greenberg. And our "Chartman" team, Gary B. Smith and Adam Lashinsky, experience the thrill of victory and the agony of defeat this week as they go over past calls and predictions. Plus, this week's "Word on TheStreet" will take a closer look at market averages. Averages are up for the year, but more stocks are down than up in calendar year 1999.

"" on the Fox News Channel airs at 10 a.m. and 6 p.m. EDT Saturday and at 10 a.m. ET Sunday.

To find the Fox News Channel, Fox's 24-hour cable news channel, in your area, call your local cable operator or see our "TSC on Fox" page at

Also on

Market Features: Markets Spin a Yarn of a U.S.-Japan Deal to Weaken Yen

The widespread belief that the Treasury tried to influence the Bank of Japan's monetary policy in exchange for dollar/yen intervention is almost certainly incorrect.

Trade Winds: China's New Net Stance Shows Truth in Old Adage

Expect China's enforcement of a ban on foreign investment in the Internet to crumble in the face of economic realities.


Global Tax Forum: Overseas Corporations Are Poor Tax Dodges

Also, IRAs, ADRs and nonresident aliens.

Bob Gabele: Getting Inside Insider Buying

Bob Gabele looks at some nonobvious reasons why insiders acquire their company's shares.

Market Features: IMF Wants Another Fed Rate Hike, but Is Anyone Listening?


David A. Gaffen

Staff Reporter

9/22/99 8:00 PM ET

One of the last things the


needs is another talking head telling it what do to. But at least this talking head isn't undermining the Fed.

Michael Mussa, economic counsel for the

International Monetary Fund

, said Wednesay his personal preference was for the Fed to raise the fed funds target one more time before the end of the year. Doing so would address the Fed's worry over a widening

current account

deficit, and perhaps take a little air out of the stock market, he said at the presentation of the IMF's World Economic Outlook.

It would appear that Mussa is advocating a more proactive, forward-looking response to monetary policy than most economists think the Fed will take for the rest of the year. But in reality, what Mussa said this morning is consistent with previous IMF statements and only a mildly different approach to topics that the Fed's been talking about for several months.

"In the Fed's own minds, they'd say the next direction of rates should be up rather than down," says Josh Feinman, chief economist at

Deutsche Asset Management

. "They're aware of the risks the IMF is talking about. The current account deficit is telling us that the U.S. economy is potentially overheating.

But part of reason it is so wide is because there is weakness in our major trading partners."

The current account deficit measures the difference between the dollar value of goods, services and payments the U.S. is importing and what's leaving the country. Due to incredible consumer demand and the attractiveness of our financial assets, the current account deficit rose to a record $80.7 billion for the second quarter.

The fear is that recent strength in the euro and yen will cause foreigners to cut back on dollar investments, which in turn would force a rapid decline in the dollar. That would spark inflation jitters and hurt the U.S. financial markets. The Fed would be unable to cut rates because an easy monetary policy could trigger more inflation and send the dollar even lower.

The scenario Mussa seems to be putting forth is for the Fed to pre-empt this decline by raising interest rates. That would cut back spending, including imports, and slow the economy. But a firming of growth throughout the rest of the world, especially Europe and Japan, would have a more gradual effect in reducing the current account deficit.

The IMF "thinks that part of that process will require more Fed tightening," says Feinman. "But nobody should disagree that a lot of it has to come from stronger growth overseas. You'll see -- if that happens, relatively quickly, the current account situation will turn."

Mussa believes there needs to be a rebalancing of growth among major world economies. Where the IMF and Fed differ, then, is that the Fed seems to be willing to be more reactive and stand on the two rate hikes undertaken this summer. The IMF, in its report, said the Fed would have "to be particularly alert to repercussions in the economy of the rise in the stock market as well as to any sign that it is broadening to a wider range of asset prices."

Not that advice from the IMF is necessarily to be taken. Having poured a ton of money into the bottomless pit called Russia, the IMF has developed a bit of a credibility problem. A forced slowdown by raising rates just so everyone is on a level playing field isn't a realistic solution. The Fed can't make other world economies grow faster.

Besides, the Fed doesn't intend to target asset prices, and has said as much. Data show that U.S. spending is affected more broadly by a rise in interest rates than a drop in the stock market. While the IMF thinks the Fed should bump rates up one more time before the end of the year, Mussa admitted, "there's no plausible case for a substantial increase

in rates at this stage."

Fed Chairman

Alan Greenspan

(who's rarely that frank) couldn't have said it better himself.

Wrong! Dispatches from the Front: That Streakless Street


James J. Cramer

9/22/99 5:17 PM ET


and I can't stop kicking each other. If you wanted to make big money today, you had to lose big money yesterday. If you wanted to make big money yesterday, you had to lose big money on Friday.

You get the picture.

How unnerving is it that this market can't put together a convincing streak? Let's take our


(ALTR) - Get Altair Engineering Inc. Class A Report

position. We bought it yesterday after assessing that the impact of the Taiwan outage wasn't so severe.

Today, when there were people buying Philadelphia semiconductor index calls and loving the commodity semiconductors, Altera went begging because the power still may not be on.

Just the sheer split decision coming from a declining


and a soaring

Nasdaq 100

is enough to send you into paralysis. How do we know that both markets won't reverse direction tomorrow, in some sort of weird "frontsie/backsie" day?

Beats me. Gotta go see some companies. When it gets this inconsistent, your level of conviction must grow to play. The only way you can maintain that conviction is to stay current.

What a drag.

Random musings:

A bunch of you asked me if I wasn't disappointed in the revenue growth of



. To which I replied, I am never disappointed when one of my stocks goes up.

Those who were looking for a reason for 3Com to fall on this news of a better-than-expected quarter are missing a key ingredient of this game: 3Com did not disappoint. That's what people were used to. So the stock rallied.

The amazing thing to me was how few upgrades we got from the analyst community. That means this story may have some legs. We sold some stock up at 30 but held on to the balance of our position.


James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund was long Altera and 3Com. 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

Evening Update: Bed Bath & Beyond Tops Estimates; Global Crossing to Join S&P 500


Eileen Kinsella

Staff Reporter

9/22/99 7:57 PM ET

Bed Bath & Beyond

(BBBY) - Get Bed Bath & Beyond Inc. Report

is enjoying a comfortable week. The domestic merchandise chain posted second-quarter earnings of 23 cents a share, a penny better than the 17-analyst

First Call/Thomson Financial

estimate and up from a year-ago 18 cents a share. The company said same-store sales increased 9.7% in the latest quarter.

Standard & Poor's

announced Monday that Bed Bath & Beyond will be added to the

S&P 500

, although the move has been postponed because of a delay in



acquisition by

Fleet Financial

(FLT) - Get FLEETCOR Technologies, Inc. Report

And speaking of the index ...

... Standard & Poor's said

Global Crossing


will replace


(FRO) - Get Frontline Ltd. Report

in the S&P 500, upon completion of Global's $9 billion buyout of Frontier.

In other postclose news (earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified):

Earnings/revenue reports and previews

AGL Resources


said it sees fourth-quarter earnings below analyst estimates, due to a decline in its customer base. The eight-analyst estimate calls for 17 cents a share. The company said it expects a fourth-quarter gain of $15 million on the sale of its stake in

Sonat Marketing

, a natural gas marketer.

Cable Design Technologies


reported fourth-quarter earnings of 47 cents a share, better than both the seven-analyst estimate and year-ago 40 cents.

Coldwater Creek


posted second-quarter results of 14 cents a share, including a 5 cent gain. The four-analyst estimate called for earnings of 6 cents a share and the year-ago result was 5 cents.

Heilig Meyers

(HMY) - Get Harmony Gold Mining Co. Ltd. Report

posted second quarter results of 4 cents a share, short of the eight-analyst estimate of 6 cents a share and the year-ago 15 cents.

Thanks to a vogue for those funky marshmallow sofas a la

Austin Powers

, furniture maker

Herman Miller

(MLHR) - Get Herman Miller, Inc. Report

posted first-quarter earnings of 43 cents a share, beating the seven-analyst estimate of 41 cents and a year-ago 39 cents a share.

Speedfam IPEC


posted a first-quarter loss of 37 cents a share, in line with the six-analyst estimate but wider than the year-ago loss of 25 cents.



posted first-quarter earnings of 42 cents a share, a penny better than the eight-analyst estimate of 41 cents a share and up from 35 cents a year ago.

Offerings and stock actions

Goldman Sachs



6.25 million-share IPO at $13, the top of the estimated $11-to-$13 range. The Houston-based retailer sells luxury goods.

Direct email marketer's


3.4 million-share offering was priced at $11 a share, within the estimated $10-to-$12 range.

Deutsche Banc Alex. Brown

is the lead underwriter.


And stay out ... Shares of

Acme Electric


were suspended from the Big Board, a day after the company said it wanted to switch to the

Nasdaq Stock Market

. The NYSE said it would stop trading the shares on Oct. 7 and seek permission from the

Securities and Exchange Commission

to delist the stock.



named Arthur Reeds III president, chairman and CEO, succeeding Leonard Rubenstein, who retired.

Hawaiian Airlines

(HA) - Get Hawaiian Holdings, Inc. Report

plans to buy up to 20 717-200 commercial passenger jets from


(BA) - Get Boeing Company Report

as part of an effort to modernize its fleet and cut operating costs. The airline placed a firm order, valued at more than $430 million, for 13 planes to be delivered in 2001.

Bond Focus: Treasuries Resist Dollar's Bad Influence


Elizabeth Roy

Senior Writer

9/22/99 4:48 PM ET

The dollar beckoned the bond market lower again today, but bonds resisted to end the day unchanged.

It was a low-volume session in what has so far been a low-volume week. The economic calendar, devoid of major releases this week, offered up only the

Beige Book

, the


anecdotal account of economic conditions around the country, and it was short on surprises.

The benchmark 30-year Treasury bond ended the day unchanged at 100 14/32, its yield 6.09%. Shorter-maturity note yields were unchanged to very slightly better on the day.

The dollar, whose slide against the Japanese yen has captivated U.S. bonds and stocks alike ever since it started making new lows for the year two weeks ago, tumbled further today, reaching 104.05 yen, down from 104.82 on Tuesday. Fueling the latest leg of the yen's climb: Yesterday's decision by the

Bank of Japan

not to make a monetary policy change to weaken the currency, whose rise hurts Japanese exporters.

U.S. bond prices have been following the dollar lower in part because of the perception that a weakening currency will trigger selling of dollar-denominated assets by foreign investors. At the same time, a weaker dollar makes imports more expensive, which could lead to more widespread price increases in the U.S. economy.

Bonds didn't follow the dollar lower today perhaps because it is widely expected that this weekend's


finance ministers meeting in Washington, D.C., may produce an agreement to hammer the yen lower. "A lot of people feel that this is just posturing. There will be a joint intervention, and the forum for it is this weekend's G7 meeting,"

Morgan Stanley Dean Witter

chief money market economist Bill Sullivan said.

But it's also important to note that the dollar isn't weakening aggressively against any currency but the yen, Sullivan said.

In his view, the dollar "still represents a negative for Treasuries on a short-run basis." In the longer term, if the yen keeps strengthening, it could imperil the economic recovery under way in Asia, enhancing the relative appeal of U.S. financial assets.

As for the

Beige Book, which comes out eight times a year ahead of the eight scheduled meetings of the

Federal Open Market Committee

, the Fed's monetary policy committee, it was balanced in its assessment of the forces at work in the U.S. economy, but habitual readers sensed a bond-market-friendly bias.

Patrick Dimick, senior U.S. economist at

Warburg Dillon Read

, said that while the report talked about a strong economy and a resurgent manufacturing sector, those conditions have become Beige Book staples in recent months.

New in the latest edition, Dimick said, were observations that while the labor market remains very tight, "several districts have noted a slackening in the demand for labor," and that while the housing sector remains very strong, "many districts have been noticing a slowdown."

"While the economy continues to grow very rapidly and labor is in very short supply, the fact that some districts are reporting softening demand tells me that the Fed's work -- the 50 basis points of tightening -- is starting to bite in some pockets," Dimick said. "If it's starting to have an impact, it makes sense to wait and see how significant an impact it's going to be."

As opposed to, say, hiking rates a third time at its next meeting on Oct. 5. The Fed hiked the fed funds rate from 4.75% to 5% in June, and to 5.25% in August.


fed funds futures contract listed on the

Chicago Board of Trade

improved slightly today, pricing in a slightly lower probability of an Oct. 5 rate hike.


Street Sightings

Dave Kansas moderates a CEO Summit panel at the World Economic Development Congress at the Omni Shoreham Hotel in Washington D.C. The subject is "Assessing the external factors driving change in your marketplace and within your organization." The panel begins at 10:30 a.m. EDT. on Thursday, Sept. 23.

Copyright 1999,